Foreclosures Compelling America to Sell Its Land to Outsiders

Foreclosures are compelling America and Americans to sell pieces of its land to outsiders. A new type of land grabbing has started. Till now foreign money has focused on buying iconic buildings – Barney’s New York, Chrysler Building etc. But now steps are ahead in scooping up millions of foreclosed houses begging to be sold for peanuts. This is the scene across America.

One such group has set aside $29 billion to buy foreclosed residential units. It has hired mortgage brokers to look for bulk bargains along the west coast of the country according to The Post. Brokers Mark Hanson and Steve Iverson have been chosen for the job. The duo was silent about the name of their client. From reliable sources it is learnt that the money can be termed as sovereign fund.

These unknown sovereign funds have teamed with American investors, hedge funds and banks in Wall Street for walking into REO houses going for bargain deals. The prices have fallen so low that investors are being tempted.

The sovereign fund has two advantages over others – the depressed dollar gives it an edge and makes the houses a real bargain and secondly there is no limit to the availability of the funds.

The Abu Dhabi sovereign fund, for example has $875 billion, while others from Norway, Singapore and Kuwait funds are respectively $391 billion, $303 billion and $264 billion. These are all from proceeds from sale of oil. The Abu Dhabi Investment Authority is giving top priority in investing in real estate according to Financial Times. However ADIA did not respond to a question sent by e-mail.

The prices of majority of bank-repossessed units vary according to location and are being sold for roughly 60 cents to 80 cents to the dollar. In one instance Hanson offered 40 cents to the dollar for a California estate worth $2.5 billion owned by IndyMac and Washington Mutual. But the offer was not accepted. The banks were not available for comment. Hanson has increased his offer to 60 cents for a group of bank-repossessed houses that are valued at $500 million.

There is such secrecy about the whole issue that many experts think that it is all smoke without fire. Robert Pardes of Recourse Recovery Management Services said, “The size and discount of that type of deal isn’t the norm yet.” But the possibility of such a thing happening should make the country alert.