More Bank Foreclosure Listings Buying for Inland Empire

by Peter Vernon on Finance Foreclosures

The nonprofit organization Inland Empire Economic Recovery Corp. is trying to gather financial support to boost its efforts to purchase Inland Empire-owned properties on bank foreclosure listings. The organization will then rehabilitate these foreclosure homes to make them livable and place them on the market for sale.

But the success of raising more investments will be determined by the price and how fast it can sell its first renovated foreclosed property in Rialto in San Bernardino County, California. The Rialto property is the litmus test on whether the organization can generate a reasonable profit for its investors.

Inland Empire executive director Robert Hooker said that potential investors are waiting for the outcome of the organization’s project after it bought and renovated 10 or more properties on bank foreclosure listings. The organization is a venture between the private investors, county and local governments.

Recovery corporation organizers have been preventing large real estate firms from purchasing foreclosure properties in bulk. There are concerns that real estate firms might sell these distressed properties to corporate landlords or rent them out, thus pulling down local property values even further.

On the other hand, the recovery organization needs to show to lenders that it can save them money. It purchases Inland Empire foreclosed houses from banks at huge discounts. All the administrative costs and rehabilitation-related details are handled by the organization.

Meanwhile, private investors are still trying to determine whether or not the organization can generate profit from its venture before they put in their money. Hooker said that so far, about $60 million private investment capital has been pledged.

Sierra Capital Investment Partners has committed $50 million while Glaeser Builders Inc. plans to invest as much as $10 million on the venture. Hooker said that a number of smaller investors have shown interest by committing as much as $3 million dollars. He said that many of these investors are from Southern California, adding that the organization is trying to entice large hedge funds and pension funds nationwide.

Hooker said that the biggest challenge in negotiating with banks is investors and stockholders. He said that they are concerned about selling houses at discounted prices for fear of litigation from their investors.

Industry experts said that the region has posted 130,000 properties on bank foreclosure listings since March 2007, and an additional 140,000 homes are projected to go into foreclosures until 2012.