A California non-profit is concerned that REO bulk sales would result in a shopping spree for investors.

According to a noted nonprofit in Berkeley, Calif., nonprofits should not only play a key role in any government plan for REOS, but should also ensure that REOs effectively help the entire community.

The government’s catalog of REOs is big. So big, actually, that it makes up half of the 500,000 REOs currently on the market; so big that the government began soliciting comments from the public on what to do with the properties.

More than 4,000 ideas followed, including one from the National Association of Realtors, but the idea of the Greenlining Institute, the non-profit in question, is the first of its kind.

Orson Aguilar, the institute’s executive director, said the institute’s focus is on how REOs could be a benefit to the community – and how bulk sales by investors ruin that potential.

“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.”

He continued: “We’re talking about a huge transfer of wealth to a group of investors in the name of stabilizing the market.”

To avoid that problem, Aguilar said that any bulk investments should provide a local representative who would oversee the REOs progress, whether they be rented, renovated or resold as is.