Investors eager to capitalize on low home values and a booming rental market are reportedly finding there are not enough foreclosed homes to buy.

Inventories of real estate owned (REO) properties have been shrinking due to delayed foreclosure processing and few bulk sales by banks in favor of short sales, Bloomberg News reports.

In hard-hit areas such as Phoenix and Miami, investors competing for an ever smaller supply of properties seem to have helped home prices find a bottom. But rising prices and a lack of bulk sales means investment funds are having trouble spending the at least $6.4 billion in capital they have allocated to property accumulation, Bloomberg said.

Some investors are skeptical of buying in bulk for fear of purchasing "junk" properties that will underperform.

A pilot version of an "REO-to-rental" program in which Fannie Mae will offer 2,490 foreclosed properties in hard-hit metro areas to investors in bulk for conversion to rentals has garnered much attention and some opposition, particularly in California.

Further sales of Fannie Mae and Freddie Mac REO properties "may be delayed by political pressure to monitor the properties in the pilot project, " Bloomberg said, citing a June 7 note by Jaret Seiberg, a policy analyst with Guggenheim Securities LLC in Washington, D.C.

"This could be a disappointment to many investors who expected Fannie and Freddie to unload thousands of properties through the REO-to-rental program," Seiberg wrote.  

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