With the housing market apparently showing long awaited signs of stability, it's not hard to understand why a program allowing investors to purchase the government's stock of real-estate-owned (REO) homes in bulk and rent them out is generating so much buzz.

The Federal Housing Finance Agency's (FHFA) REO-to-rent initiative has become a hot topic with many investors saying they were keen on purchasing distressed debt directly. And participants said that if the government were to offer to help finance these purchases, the REO-to-rent program would likely attract big players such as private equity firms. That could potentially provide much-needed collateral for either rated or unrated private mortgage securitizations, jump-starting this long-dormant market.

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