(Bloomberg News) The Federal Housing Finance Agency will begin inviting bids from investors to buy packages of foreclosed properties to be offered as rentals.

The agency today said it will send detailed information to investors who qualify to participate in the bulk-sales pilot program. About 2,500 foreclosure homes will be marketed in Atlanta, Chicago, Las Vegas, Los Angeles, Phoenix and parts of Florida, according to a statement posted by the agency on its website today.

The program is limited to properties owned by Washington-based Fannie Mae, which sells and guarantees home loans. The subprime lending collapse left the company with more than 122,000 foreclosed homes, also known as real-estate-owned or REO, when loans that it guaranteed failed. Fannie Mae and its smaller rival, Freddie Mac, were taken under government conservatorship in 2008 amid mounting losses. Freddie Mac will not participate in the pilot programs.

Under the pilot program, the first large-scale bulk sales effort by FHFA, investors will agree to be equity partners with Fannie Mae.

"This is another important milestone in our initiative designed to reduce taxpayer losses, stabilize neighborhoods and home values, shift to more private management of properties, and reduce the supply of REO properties in the marketplace," FHFA Acting Director Edward J. DeMarco said in a written statement.

Qualified Investors

The agency announced its intent to commence the program and invited investors to apply on Feb. 1. Credit Suisse is the financial advisor on the sale.

To participate, investors must show that they have the experience and financial capacity to purchase and manage the properties, the agency said. Once they qualify, they'll receive detailed information about the properties. To bid on the homes, qualified investors must post a security deposit and sign a confidentiality agreement to gain access to detailed information, according to the news release.

"It's a good first step," Oliver Chang, a Morgan Stanley analyst who has advocated for bulk sales of foreclosures as rentals, said in a telephone interview from San Francisco today. "We think the backlog of distressed homes is the biggest drag on a recovery."

85 Percent Occupied

The portfolio is comprised of 2,854 housing units in 2,490 homes, of which 85 percent are currently occupied by renters. The announcement doesn't explain several important parts of the program, Chang said, including if the property will be sold in geographic or property-type portfolios; if there will be financing; how the management will work; or what, if any, stake Fannie Mae will retain.

One of the qualified investors is Waypoint Real Estate Group, an Oakland, California company that owns more than 1,000 single-family rentals in that state. The properties were acquired through distressed sales since 2009, including more than 100 purchased in January, after Waypoint announced a $250 million commitment from GI Partners, an investment fund based in Menlo Park, California.

The Fannie Mae bulk sale is an "opportunity to be able to buy a collection at scale in geographic markets," said Gary Beasley, managing director of Waypoint.

Waypoint met with Fannie Mae and FHFA officials in January to discuss the offering, Beasley said. At the time, the idea was that Fannie Mae would sell to private investors and not retain a stake, he said. He also said he hasn't seen any indication that Fannie Mae will offer financing.

Financing A Question

He has seen proposals circulated for comment by Freddie Mac that would offer financing similar to what's available for multifamily properties, with lending based in part on the cash flow of rental income rather than the value of the collateral, Beasley said.

"Now nobody is making those loans for single-family homes in the private sector," he said.

Freddie Mac will "evaluate the pilot with our conservator and make a decision after that," Brad German, a spokesman for the McLean, Virginia-based mortgage company, said in a telephone interview.

Today, California Attorney General Kamala Harris asked DeMarco to suspend some foreclosures on Fannie Mae and Freddie Mac loans.

In a letter to DeMarco, Harris requested a suspension of foreclosure sales in California for the more than 60 percent of loans owned or guaranteed by Fannie Mae and Freddie Mac.

Harris wants the sales halted until "your agency has completed a thorough, transparent analysis of whether principal reduction is in the best interests of struggling homeowners as well as taxpayers," according to the Feb. 24 letter.