How about doing a federal auction with a minimum price. Open it up to the investment market and then set up loans so that investors could benefit from the pricing and borrowers can come back in and get these properties but have the private sector manage it.
Insure the property with a loan in case the loan goes belly-up kind of like an FDIC insurance for 100k in banking except this could be the full value of the loan.
How bout just doing a private auction? Will hurt for awhile but will settle itself out over time.