This article got me thinking…
http://www.nypost.com/seven/08102008/business/lost_sovereignity_123879.htm

If you were a soverign wealth fund, why bother to pay all the RE middlemen (Real estate agents, mortgage brokers, banks, investment banks to securitize, ratings agencies, etc)?  After all, all you need is capital and a homebuyer to do a RE transaction.

Why not just go buy a huge amount of REO off a distressed bank at a discount, and then assume all the roles yourself?  You could play landlord and rent, or play a bank and find a homebuyer and do your own due dillegence and finance them with your own mortgage.  Or even do a hybird (ex. rent to own).  The middlemen don’t seem to have added much value for you in the past - their due dilligence was terrible and you got swindled on your “AAA” tranches you bought.  You’d need some local experienced personnel of course - buy why not just hire people away from the existing banks?  Why buy the bank and assume it’s debts and liabilites when you can just headhunt their personnel for your new bank?

Any thoughts on this?

Ahhh, I do so love SWF’s. I’m sure you’ll find this scintillating reading.

That sounds like a flipper in a grand scale.  Or it is completely different animal?

Anonymous - 14 August 2008 12:48 PM

This article got me thinking…
http://www.nypost.com/seven/08102008/business/lost_sovereignity_123879.htm

If you were a soverign wealth fund, why bother to pay all the RE middlemen (Real estate agents, mortgage brokers, banks, investment banks to securitize, ratings agencies, etc)?  After all, all you need is capital and a homebuyer to do a RE transaction.

Why not just go buy a huge amount of REO off a distressed bank at a discount, and then assume all the roles yourself?  You could play landlord and rent, or play a bank and find a homebuyer and do your own due dillegence and finance them with your own mortgage.  Or even do a hybird (ex. rent to own).  The middlemen don’t seem to have added much value for you in the past - their due dilligence was terrible and you got swindled on your “AAA” tranches you bought.  You’d need some local experienced personnel of course - buy why not just hire people away from the existing banks?  Why buy the bank and assume it’s debts and liabilites when you can just headhunt their personnel for your new bank?

Any thoughts on this?

When IR2 said that he was taking a vacation in the desert I didn’t think he meant he was interviewing for the RE agent position for the SWF in Dubai. But, it does sound like a good idea to me. Buying REOs in bulk would be the way to go, and the person managing them here in the US would stand to make some serious ca$h.

Not to nitpick, but isn’t that essentially what Donald Bren did…  including cutting out the landowner?

I think this is one of those things that sound good, but really aren’t.

Either way, no matter how sophisticated someone may be in their
own country, they might get treated and cheated by rubes in another
country.

Hence the middlemen, who may also cheat the ferriners in their own
uniqued way.  Remember when the Japanese were gonna own the
earth, and they bought trophy buildings like Rockefeller center, and
others, which they later sold at a huge loss?