Monday, June 11, 2012

FHA Hopes Bulk Sales Will Curb Foreclosures

The Federal Housing Administration announced it will begin selling off distressed mortgages in bulk, which may help prevent foreclosures for thousands of home owners. Beginning in September, FHA says it hopes to sell 5,000 mortgages each quarter. The move will also help the FHA get rid of some of the 700,000 or so seriously delinquent mortgages that it holds. Many of those delinquent loans originated from 2007 and 2009, the height of the housing crisis. Housing Secretary Shaun Donovan says there may be a greater opportunity for investors to buy the troubled loans and either reduce the principal on the loans or offer rent-to-own plans, thereby keeping more home owners in their homes. Home owners whose loans are sold might one day get a call from someone saying “‘Hey, we’re willing to cut your payment dramatically, or cut the balance on your loan dramatically,” Donovan said. “There are going to be a set of options that might arrive on that doorstep as the best news that home owner has ever heard.” Source: “U.S. Agency to Sell Off Loans to Stem Foreclosures,” The New York Times (June 8, 2012)

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