I recently had the pleasure of serving as one of the expert panelists at the Five Star Conference & Expo held at the Hilton Anatole Hotel in Dallas.

This particular panel was part of The Five Star REO Lab, and was titled, "Adjusting for Inventory." We focused on the need for real estate brokers and agents to diversify their service offerings by including retail sales, property management, valuations and other services, since REO inventories have decreased noticeably in most markets.

While it is true that REO inventories are declining in most markets across the country, I offered the argument on the panel as I do here that brokers and agents who have specialized in or at least have participated heavily in the REO market should remain plugged into that space.

This is because the so-called housing recovery has been artificially created in large measure by government intervention with programs such as HAMP, HAFA, foreclosure moratoria due to robo-signing, and other key factors.

We are not headed for another housing downturn as much as we are still in the major one caused by the housing bubble that burst in 2007-08. Affordability issues, looming interest rate hikes as have been predicted by Federal Reserve Chairman Janet Yellen, too many FHA loans being made (this is the "new" subprime market), federal emphasis being placed on low-income borrowers, and other factors are causing house prices to decline once again in many markets.

In addition, many of the foreclosures that had been stalled in California after the passing of the Homeowners Bill of Rights so that everyone involved could clearly understand its impact are now being flushed out of their system.

This is also true in judicial foreclosure states where there had been significant backlogs in the court systems. Most of these foreclosures will go all the way through the process to become REO properties.

Because I believe a further downturn is inevitable, mostly due to too many people having short memories, REO professionals need to be on top of their game to be ready for another wave — certainly not a tsunami, but a wave nonetheless.

At one point during the discussion it was argued that the federal government plays a vital role in resolving issues surrounding the economy in general and the housing market in particular.

I countered that the true role of government is to protect the citizens of the United States, to legislate and provide oversight, but they should stay out of the way of the private sector, because they are the ones with the experience and knowledge to resolve the housing crisis.

It has been my view since the early days of the financial meltdown and the ensuing housing crash that had the government stood back and allowed the private sector to develop ways to resolve these issues it would have been quite painful to be certain, but the recession would not have lasted so long.

Nor would this obscene debacle have been so devastating for so many individuals and families due to related loss of income and jobs.

And while the second-quarter GDP estimate of 4.6% reported today by the Bureau of Economic Analysis appears to reflect an improving economic environment, one quarter’s numbers does not a trend make.

There are still enough indicators out there that suggest another round of foreclosures is near. That was certainly reflected by yours truly and other panelists at this conference.

Throughout the panel discussion it was agreed that new and improved technology will make it easier for agents and brokers to diversify their service lines. Investment in technology efficiencies is as important as ever in this transitioning new climate, whatever service lines are pursued by each individual.

Lynn Effinger is a veteran of more than three decades in the housing and mortgage servicing industries. He currently serves as executive vice president of ZVN Properties Inc.