While the housing industry waits—some with trepidation—for the White House to come forth with a plan to better manage the government’s huge inventory of foreclosed properties, it seems as though one of the nation’s housing finance giants may beat Uncle Sam to the punch.

The much-maligned Bank of America (BofA) is working on a short-sale-to-lease program for distressed borrowers who don’t qualify for government-backed refinance programs.

As outlined by BofA executive Ron Sturzenegger at the Urban Land Institute’s 2011 Fall Meeting in Los Angeles, the bank would regain title to mortgaged properties under a short-sale arrangement and then lease the houses back to their occupants for three years at rental rates that approximate the average for their particular areas.

At the end of the 36-month lease, Sturzenegger said during a panel session on capital markets, the institution would resell the houses to people who wanted to buy them back. He did not say what price buyers would have to pay to reclaim ownership from the bank.

In August, the Obama administration asked the housing industry for ideas on how to help the Federal Housing Administration, Fannie Mae, and Freddie Mac deal with their real estate owned (REO) holdings. And just recently, 33 U.S. senators wrote to President Obama, asking him to expedite plans for selling and renting the nearly 100,000 houses now held on the government’s books.

“We urge you to analyze, quickly and diligently, the input you have received so that all REO properties under your control may be best managed to produce the most value for Fannie Mae, Freddie Mac, and FHA,” the lawmakers wrote. “As part of this analysis, we ask that you also keep in mind the importance of looking for the most effective ways to stabilize neighborhoods and housing values.”

Whether BofA is working with the government or going it alone, Sturzenegger did not say. But the managing director of legacy asset servicing at the Charlotte, North Carolina–based institution did say that investors are interested in the program, as are borrowers.

But he also said that two obstacles still need to be overcome before the program becomes operational—governmental clearance and finding someone with the ability to run it.

He told attendees at the session that regulators must sign off on the program, acknowledging that the bank is being fair to its borrowers. Unjustly or not, the huge banking institution, which purchased Countrywide Home Loans, has been criticized for its treatment of borrowers who are behind on their house payments and in danger of losing their homes.

He also said that while the conceptual side of the effort is in place, it will be “a challenge” to put the operational side together.

On the massive number of foreclosures that are currently in the pipeline nationwide, Sturzenegger, who led a panel discussion on the capital markets, said the real issue isn’t the overhang but how long the process takes. “It can take an average of 24 months” from the time a borrower becomes delinquent until the house is finally repossessed, he told conference attendees.

To deal with the problem, the BofA executive would have states allow lenders to take back the 40 percent of the defaulted properties that are vacant in a quick 30 days.

The other 60 percent of houses in the foreclosure pipeline are still occupied by their owners, and would continue to slowly wind their way through the process so that those borrowers would have every opportunity to remain in their homes, he said. But if lenders can prove that the properties are no longer occupied by their owners, they should be able to reclaim those houses in a month, he told the conference.

Meanwhile, participants with Sturzenegger on the capital markets panel said that savvy real estate investors are not sitting on their hands waiting until the economy climbs out of the doldrums. Rather, they are putting their cash to work now.

“Whether it’s baskets or caskets, you have to have the wood,” said Roy Hilton March, chief executive officer of Eastdil Secured, a Wells Fargo company. “Now is the time.”

Kelvin Davis, a senior partner in TPG Capital, agreed, but not without a couple of caveats. Opportunity lurks, he said, but investors need to be “very selective” and have the ability to enhance value.

Davis, who heads TPG’s North American division, including its real estate fund, said he is looking for markets and businesses that are being overlooked by core capital. “There are opportunities,” he said, noting that one of his firm’s recent acquisitions was the Taylor Morrison homebuilding firm, “but you have to be willing to take some risk.”

Michael McCaffery, chief operating officer at Makena Capital Management, told attendees at the session that he, too, is looking to create value with marginal assets, adding that investors “with a stomach for some illiquidity and risk” will see substantial returns.

Simon Treacey, group chief executive at MGPA, which has an $11 billion investment portfolio under its wings, said the next few months should be “quite interesting” for savvy buyers. He said he expects some “very, very distressed opportunities” to present themselves, “especially from banks.”

“If you stick to the fundamentals, this could be a banner year for buying,” Treacey said.