Financial Leverage for a Foreclosed Homes Prevention Program

San Bernardino County, California’s nonprofit partnership, Inland Empire Economic Recovery Corp. has a pending deal with Sierra Capital Corp. that will help boost its foreclosure prevention program.

Inland Empire Economic Recovery has received about $50 million to buy and renovate repo homes in bulk. The nonprofit organization is a partnership between local businesses and the Inland government.

Inland Empire Chief Executive Officer Bob Hooker explained that the organization’s pending agreement with Sierra Capital will give it a financial leverage to buy a large volume of bank owned foreclosed homes at discounted prices.

Sierra Capital Chief Executive Officer and President Keffer Norris hopes that the partnership between Inland Empire and his company would be able to start purchasing foreclosure properties within a month.

Hooker said that the public-private partnership intends to use the funds to purchase and renovate bank foreclosures, sell them to eligible owner-occupants and bring profits to investors. Under the plan, the partnership hopes to recover the original investment from the resale price of renovated foreclosure homes and then use the proceeds from the sale to purchase, fix and sell more distressed houses.

Norris said that the initiative would provide opportunity for banks to sell a large volume of their properties on foreclosure listings. The Inland Empire could acquire foreclosed properties at 15 percent or 20 percent less than the appraised value. He added that the $50 million funding would be enough to allow the partnership to purchase and renovate about 200 to 300 bank foreclosure properties in the area every four months.

For almost two years, Sierra Capital was able to rehabilitate nearly 350 bank owned foreclosed houses in San Bernardino and Riverside counties.

Inland Empire’s major goal is to prevent the neighborhood deterioration that happened in the Inland Southern California in the early 1990 recession which resulted to investors buying volumes of foreclosure properties and filling them with renters.

In January, the San Bernardino County Board of Supervisors awarded the partnership with seed money amounting to $2.5 million. But so far, the partnership has not purchased or renovated a single foreclosed house due to difficulties in obtaining private investment money and establishing relationships with some bank asset managers.

Last month, Inland Empire partnered with construction and development firm, Glaeser Builders Corp. for projects worth $1.5 million. Glaeser owner Pete Glaeser said that the partnership will purchase their first bank foreclosed house in Rialto to be followed by 10 foreclosed properties owned by the Bank of America in Victorville and San Bernardino.

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