With the foreclosure market still strong, the government is debating what actions to take. Last week's announcement by the Fed that they were looking at ways to lower mortgage interest rates even more is likely to send some back into the "wait and see" mode, while investors continue to buy.

According to Tom Kelly writing for Inman News, "For years, at least one investor group has encouraged Fannie and Freddie to allocate funds for the rehabilitation of their foreclosed properties, then set aside another pot of cash to help subsidize the financing. That way, they could self-finance their newly refurbished inventory with low down payments, reduced closing costs and quick turn-around times while removing troubled assets." That hasn't happened and now these Government Sponsored Enterprises are the largest holders of foreclosed properties.

Recently, the Federal Housing Finance Agency (FHFA), the U.S. Treasury Department and the Department of Housing and Urban Development (HUD) announced they would seek new options for selling single-family real estate owned (REO) properties held by Fannie Mae, Freddie Mac and the Federal Housing Administration (FHA).

"While the enterprises (Fannie and Freddie) will continue to market individual REO properties for sale, FHFA and the enterprises seek input on possible pooling of REO properties in situations where such pooling, combined with private management, may reduce enterprise credit losses and help stabilize neighborhoods and home values," said Edward J. DeMarco, FHFA acting director.

"Due to a strong rental market, driven at least in part by the foreclosure environment, investing in these properties makes sense to investors who see an unstable investment market in traditional stocks." Now, according to the recent article in Inman News, "The government is looking for approaches that achieve a reduction in foreclosure volume but also for current renters to become homeowners - and to assist former homeowners with affordable rentals in a cost-effective manner.

"There have been examples that have worked. For example, from 1986 to 1988, one-third of all Fannie Mae's national REO inventory was situated in five Houston-area counties. The sheer volume of localized foreclosures and the severity of the absolute value decline rivaled the worst financial performance in U.S. history.

"The Houston slump was brought on by a declining oil industry. The resale market for REOs was challenged by a widely held public view that foreclosed homes were surely the result of a building defect or other shortcoming that made them less desirable than a regular (nonforeclosure) residential property.

"Working with Fannie Mae in Washington, D.C., a group conceived a plan to brand 'Fannie Mae as the Best Housekeeper in Houston,' celebrating the like-new condition of restored Fannie Mae-acquired properties.

"Offered with below-market, fixed interest rates, a maximum of a 97 percent loan-to-value for owner-occupants, reduced closing costs, 30-day closings, and refurbishment to a like-new condition, Fannie Mae homes were extremely popular in the Houston residential real estate market for several years.

"To accelerate the rehabilitation process, Fannie Mae's Houston office operated like a consolidated real estate disposition and construction company. A contractor/builder partner bought carpet, paint and roofing material by the container load directly from the warehouse, reducing the costs of refurbishing the foreclosed homes."

It worked once and with the government likely to become the largest landlord in America, perhaps it is time to get creative once again.

Trust an expert... call a Realtor. Call your Realtor or visit www.cdarealtors.com to search properties on the Multiple Listing Service or to find a Realtor member who will represent your best interests.

Kim Cooper is a real estate broker and the spokesman for the Coeur d'Alene Association of Realtors. Kim and the association invite your feedback and input for this column. You may contact them by writing to the Coeur d'Alene Association of Realtors, 409 W. Neider, Coeur d'Alene, ID 83815 or by calling (208) 667-0664.