HUD has announced changes to its program for selling delinquent mortgages after ciriticism that the program resulted in too many foreclosures
The Department of Housing and Urban Development announced Friday that it would be making changes to its program for selling delinquent mortgages, adding protections to prevent foreclosures.
Since 2010, HUD has sold delinquent Federal Housing Administration-backed loans to investors as part of a program meant to stem the FHA’s losses while giving investors a chance to profit by attempting to get homeowners to resume payments, according to a Wall Street Journal report. But those sales have gotten heavy criticism from nonprofits, who said there weren’t sufficient incentives to keep investors from foreclosing on the homes.
HUD’s changes to the program include requiring mortgage servicers to delay foreclosure for a year and to evaluate borrowers to see if they could be eligible for loan modifications, the Journal reported.
“We applaud the FHA for taking these significant steps to improve home ownership opportunities in neighborhoods hard-hit by the foreclosure crisis,” Ed Gorman, chief of community development for the National Community Reinvestment Coalition, said in a statement. “While we still remain concerned that some sales may result in foreclosures or purchases by Wall Street businesses, we look forward to working with the FHA to stabilize neighborhoods and keep more people in their homes.”
Since 2010, HUD has sold delinquent Federal Housing Administration-backed loans to investors as part of a program meant to stem the FHA’s losses while giving investors a chance to profit by attempting to get homeowners to resume payments, according to a Wall Street Journal report. But those sales have gotten heavy criticism from nonprofits, who said there weren’t sufficient incentives to keep investors from foreclosing on the homes.
HUD’s changes to the program include requiring mortgage servicers to delay foreclosure for a year and to evaluate borrowers to see if they could be eligible for loan modifications, the Journal reported.
“We applaud the FHA for taking these significant steps to improve home ownership opportunities in neighborhoods hard-hit by the foreclosure crisis,” Ed Gorman, chief of community development for the National Community Reinvestment Coalition, said in a statement. “While we still remain concerned that some sales may result in foreclosures or purchases by Wall Street businesses, we look forward to working with the FHA to stabilize neighborhoods and keep more people in their homes.”
