The U.S. Department of Housing and Urban Development (HUD) has announced that it is accelerating the use of loan sales through the Distressed Asset Stabilization Program (DASP) by selling severely delinquent mortgage loans insured by the Federal Housing Administration (FHA) through a competitive bidding process.
In a statement issued by the department, HUD says that it will sell at least 40,000 distressed loans over the next year, generally in quarterly sales, in an effort to reduce total claims cost and increase recovery on losses to FHA's Mutual Mortgage Insurance Fund. HUD's next scheduled sale, which will take place late in the first quarter of 2013, will include approximately 10,000 to 15,000 loans, and will have targeted Neighborhood Stabilization Outcome (NSO) pools located in select metropolitan areas in Georgia, California, Florida and Ohio.
‘This program accomplishes two very important objectives – it supports communities hardest hit by the housing crisis and it saves considerable money for FHA's insurance fund,’ says FHA's Acting Commissioner Carol Galante. ‘The results from the September sales were strong, which tells us investors of all stripes and communities are eager for this solution.’
HUD's most recent DASP-related sales took place in a two-part installment during September: a Sept. 12 sale that consisted of approximately 5,300 non-performing loans in six different ‘national’ pools with a combined unpaid principal balance of $950 million, and a Sept. 27 sale that consisted of approximately 4,100 loans in seven different NSO pools, with a total of approximately $770 million in unpaid principal balance.