On June 8, 2012, Housing and Urban Development (HUD) Secretary Shaun Donovan and Acting FHA Commissioner Carol Galante announced that they will expand sale of troubled mortgages to investors, under the Distressed Asset Stabilization Program, which to help defaulted barrowers to prevent lengthy foreclosures.
The FHA note sales program began in 2010, for a servicer to place a defaulted mortgage into loan pool must met the following guidelines:
The borrower must be minimum six months delinquent on the mortgage, is not in bankruptcy currently;
The servicer exhausted all the FHA loss mitigation and has started foreclosure process.
Under the program, FHA insured notes are sold generally below principal balance and foreclosure is delayed for a minimum of six months as the borrower gets help from servicer to avoid foreclosure. The investor acquired the loan at a discount and should help the borrower avoid default, by loan modification, or short sale, according to Tiffany Thomas Smith of www.hud.gov HUD No. 12-096
I think, the sale of troubled mortgages to investors, under the Distressed Asset Stabilization Program will help many defaulted borrowers to stay in their homes.
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