Industry NewsMortgage

HUD boosting sales of distressed FHA loans

Purchasers must delay foreclosure for a minimum of 6 months

The U.S. Department of Housing and Urban Development is now accepting applications from investors interested in buying pools of severely distressed mortgages formerly insured by the Federal Housing Administration, HUD announced today. Under its Distressed Asset Stabilization Program, on Sept. 12, HUD will be selling about 9,000 defaulted loans, about 40 percent of which will be located in four metropolitan areas particularly hard-hit by the foreclosure crisis and with large inventories of real estate owned (REO) properties: Chicago; Newark, N.J.; Phoenix; and Tampa, Fla. September's single-family loan sale will represent a sharp ramp-up for the program, which has thus far sold more than 2,100 such loans since its inception in 2010. The housing market "has momentum not seen since before the crisis," said HUD Secretary Shaun Donovan in a statement. But some metro areas "are still under pressure and some FHA borrowers remain seriously behind on their loans and stand to lose...