Secretary of Housing and Urban Development (HUD) Shaun Donovan and Federal Housing Administration (FHA) Commissioner Carol Galante announced the Distressed Asset Stabilization Program in a press conference last week. This program is an expansion of an earlier pilot program.
The Distressed Asset Stabilization Program is designed to provide further assistance to struggling homeowners. The program will sell large pools of delinquent FHA-insured loan notes to investors. Once a note is purchased, the foreclosure will be delayed six months. This will give the investor and borrower time to find a solution.
The investor will in turn work with the delinquent borrower to bring the loan current with a modification, or satisfy the debt through a short sale. Either way, the objective is the same: help the distressed homeowner.
This program will officially roll out in September, 2012, and will increase the number of loans available for purchase from 1,800 a year to up to 5,000 a quarter. As with all programs, homeowners must meet certain criteria in order to have their loan note placed in this purchase pool. First, the borrower must be at least six months delinquent and must not be in bankruptcy. Second, the servicer must have exhausted all steps in FHA’s loss mitigation process and must have initiated foreclosure proceedings.
To protect the stability of the housing market, investors must hold onto the property for three years if they are unable to bring the loan out of default. In addition, no more than half the loans purchased can result in REO properties.
“There are going to be a set of options that might arrive on that doorstep as the best news that homeowner has ever heard after, frankly, they’ve probably gone through six months or more where they’ve tried a number of things and given up hope,” said Shaun Donovan. “So this will be another chance, another lifeline for these families that they certainly weren’t expecting.”
To learn more about foreclosure solutions and receive a free report about the Mortgage Debt Relief Act, contact Emcee Arah online or call 301.452.5252. As a real estate professional who has earned the Certified Distressed Property Expert (CDPE) designation, Emcee Arah has made it his mission to know the best possible options available to distressed homeowners for both their present AND their future. And you can trust that your free consultation will be completely confidential.