HUD stepping up sales of seriously delinquent FHA loans
From AOL Real Estate
BY AOL REAL ESTATE, TUESDAY, DECEMBER 11, 2012.
Editor's note: This story is republished with permission of AOL Real Estate. See the original story, "HUD Mortgage Sale Could Help Thousands of FHA-Insured Borrowers but Unfairly Exclude Others."
By TEKE WIGGIN
The U.S. Department of Housing and Urban Development has begun selling off thousands of seriously delinquent mortgages insured by the Federal Housing Administration, a move that could save many distressed borrowers from losing their homes. But it also leaves thousands more who are saddled with equally distressed FHA mortgages without any help, raising questions about its fairness.
HUD recently announced that it cut loose 9,400 loans in the first sale under its expanded Distressed Asset Stabilization Program, and the federal agency plans to sell at least 30,000 more over the next year. The mortgages are going at steep discounts to private investors and nonprofit organizations, which are expected to modify many of the loans. That could save a sizable pool of homeowners from foreclosure and help keep the FHA, which faces a shortfall next year, from seeking a bailout.
While this represents a step forward in combating the foreclosure crisis, HUD's DASP program touches only a fraction of the distressed homeowners with delinquent FHA-insured loans who are in dire need of assistance. The nearly 40,000 loans that HUD plans to have auctioned off by the end of next year is just a sliver of the 700,000 seriously delinquent mortgages on the FHA's books.
A seriously delinquent mortgage is classified as a loan that is 90 days or more past due. A large swath of the FHA loans -- more than the 40,000 being sold, experts say -- are at least six months past due and in foreclosure. That qualifies them for the DASP, assuming that the mortgages' servicers have exhausted all FHA loss-mitigation programs. So that means that thousands of borrowers with mortgages that are eligible for the DASP -- and, arguably, equally as deserving of it -- won't get it and will continue to drift toward eviction.
Read more: http://www.inman.com/news/2012/12/11/hud-stepping-sales-seriously-delinquent-fha-loans
