Any national plan to facilitate mass sales of foreclosed homes should require the investors purchasing those properties to partner with local nonprofit groups, according to the Greenlining Institute. "We're very concerned that investors are again going to have the upper hand buying at a severe discount and then not invest in the communities where these homes are located," said Orson Aguilar, executive director of the institute, a Berkeley, Calif.-based nonprofit research group that advocates for low- and moderate-income neighborhoods. "We're talking about a huge transfer of wealth to a group of investors in the name of stabilizing the market," he told HousingWire Thursday. Investors should be local if they are buying in bulk, he said, or have nonprofit partners based in the community. "There needs to be a local contact that can be held accountable in case there are cases where the property is not being adequately maintained," Aguilar said. The Obama administration has received close to 4,000 responses to the request for information it put out in August seeking new ideas on how to sell real estate-owned properties in the federal portfolio, said Edward DeMarco, head of the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac. The government currently owns about half of the REO inventory in the country. "To be clear, this effort is not intended to develop a single, national program for REO disposition," DeMarco said Monday at the American Mortgage Conference in Raleigh, N.C. "Rather, we are most interested in proposals tailored to the needs and economic conditions of local communities." However, large-scale disposition of REOs is needed to stabilize the housing market, according to the Mortgage Bankers Association. "Getting more REO properties into the hands of owner-occupiers would be the best option for stabilizing neighborhoods," said MBA President and CEO David Stevens. Keeping the needs of local neighborhoods at the forefront is a key concern of the Greenlining Institute, said Aguilar, who presented his organization's perspective last week to DeMarco, Federal Reserve Chairman Ben Bernanke and Carol Galante, commissioner of the Federal Housing Administration. "One of our primary concerns with REO-to-rental (programs) is that they intend to sell in bulk to investors," Aguilar said. "From our experience and based on studies, investors did not do a good job of maintaining and rehabbing properties." High demand from investors makes a local partnership requirement feasible, he said. "I think these bulk REOs are such a good deal and so many investors are just salivating to get their hands on them that they'd be willing to engage in this type of process as long as their margins are kept in place and whatever return they need (is maintained)," he said. One portfolio adviser disagrees with Aguilar's assertion that any federally induced REO-to-rental program will sell to bulk investors. "Most institutions are not in favor of bulk sales, but I am sure they are doing mini-bulk or asset-by-asset bid," said Ron D'Vari, co-founder and chief executive of NewOak Capital. "Bulk auctions are typically very challenging as the buyers are not going to be able to do their homework, which is super expensive, for a case that they may lose. Many institutional buyers actually stay away or bid very low due to their light due diligence," D'Vari said. He does believe REO-to-rentals "is typically a model local investors will pursue and not a national organization. "The best strategy is to sell the assets to the highest bidders locally that know if they want to sell or rent," D'Vari said. "Leaving the asset empty is not an option." Write to Liz Enochs.