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HUD: Changes are Coming to Delinquent Loan Sales

Money Four BHHUD said it expects to announce this week that some changes are coming to its Distressed Asset Stabilization Program (DASP), a program that came under heavy criticism last month from a coalition of activists that called DASP sales a “Wall Street giveaway” because of HUD's tendency to sell the loans to Wall Street firms or private investors.

The selling of deeply delinquent mortgages by HUD and FHFA have generated no small amount of protests from housing advocates, civil rights groups, and Democratic lawmakers in the last year. The protestors believe that the majority of delinquent mortgages sold through agency programs are going to Wall Street and to private equity firms eager to profit off of the foreclosure crisis rather than achieve the best outcomes for borrowers and the communities in which the properties are located.

HUD has not said what the changes will be yet, but a spokesperson did say the changes are likely to be announced this week.

“Since 2014, FHA has made changes to the DASP program before every sale," HUD spokesperson Cameron French said. "FHA has been working on the latest round of changes to the DASP program for months, and in our desire to be as comprehensive as possible we’ve engaged a broad group of stakeholders on the potential reforms that would make the most impact for distressed homeowners. It has always been our goal to get the policy right, regardless of arbitrary deadlines, and we expect to announce those changes this week.”

Amy Schur, Campaign Director with Alliance of Californians for Community Empowerment (ACCE) Action and an organizer of a nationwide protest in February, told DS News, “We are hopeful that HUD will announce plans to work with interested cities and community stakeholders around the country to get the delinquent mortgage located in their jurisdictions into the hands of mission-driven purchasers committed to foreclosure prevention and the creation of affordable housing.”

Since HUD began selling delinquent loans through DASP in June 2012, nearly half of the approximately 25,000 loans sold have successfully avoided foreclosure, according to HUD. Also, more than 25,000 additional loans remain in delinquent servicing, meaning many of them are likely in some stage of loss mitigation.

In December 2014, HUD Secretary Julián Castro met personally with a coalition led by Americans for Financial Reform specifically to discuss DASP. The coalition was comprised of fair housing, civil rights, and consumer advocates. The meeting helped inform the changes HUD made to DASP in April 2015, according to HUD. Those changes included the aforementioned pools of loans set aside exclusively for non-profits and expanding the foreclosure delay time from six months to a year.

A HUD spokesperson said last month in response to the criticism from the coalition, “Providing an option for homeowners to remain in their homes is one of the reasons the DASP program was created. We’ve received feedback from stakeholders which has led us to make a number of important changes to the program including the creation of non-profit only pools and delaying foreclosure for a year. Additionally, we’re still evaluating further enhancements to the program to meet our core mission.”


About Author: Brian Honea

Brian Honea's writing and editing career spans nearly two decades across many forms of media. He served as sports editor for two suburban newspaper chains in the DFW area and has freelanced for such publications as the Yahoo! Contributor Network, Dallas Home Improvement magazine, and the Dallas Morning News. He has written four non-fiction sports books, the latest of which, The Life of Coach Chuck Curtis, was published by the TCU Press in December 2014. A lifelong Texan, Brian received his master's degree from Amberton University in Garland.

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