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HUD Provides Details for Next Distressed Asset Sale

HUD's next sale as part of the Distressed Asset Stabilization Program (DASP) will include even more loans.

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The agency announced it will put out about 10,000 to 15,000 loans in its next sale, which will take place in the first quarter of 2013. The most recent sale in September included about 9,000 loans.

Through the program, seriously delinquent FHA-insured loans are sold in a bidding process. The program was introduced with a two-fold purpose.

""This program accomplishes two very important objectivesâ€"it supports communities hardest hit by the housing crisis and it saves considerable money for FHA's insurance fund,"" said FHA's Acting Commissioner Carol Galante.

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""The results from the September sales were strong which tells us investors of all stripes and communities are eager for this solution,"" she continued.

Over the next year, HUD expects to sell at least 40,000 distressed loans, mostly through quarterly sales.

According to a release from HUD, the ""results"":http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/comp/asset/hsgloan of the most recent sale ""yielded an estimate of an additional $1 billion in economic value to FHA's Mutual Mortgage Insurance Fund in fiscal year 2013 alone by significantly reducing the expected severity of losses on loans sold through the program.""

The September sale involved two phases. The first part included 5,300 non-performing loans in six different national pools for a combined unpaid principal balance of $950 million. The second part consisted of 4,100 loans in seven different Neighborhood Stabilization Outcome (NSO) pools, amounting to $770 million in unpaid principal balance.

The next sale will also have targeted NSO pools, which will be located in select metropolitan areas located in Georgia, California, Florida, and Ohio.

The NSO pools are a new part of DASP and include sale terms to promote stability in hard-hit communities. For example, NSO pools require that no more than half of the loans within a purchased pool be marketed as REOs. If a foreclosure can't be averted, another neighborhood stabilizing outcome must be sought, such as holding the property as a rental for at least three years. More information on the next sale can be found ""online"":http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/comp/asset/hsgloan

About Author: Esther Cho

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