Feds to Start Selling Off Mortgages in Bulk

Feds to Start Selling Off Mortgages in Bulk

The Federal Housing Administration, now responsible for over 700,000 delinquent mortgages, soon plans to start selling them off in bulk.

The foreclosure crisis has had a particularly harsh effect in the Sun Belt. Credit: Eleanor Grosch

This is your first of three free stories this month. Become a free or sustaining member to read unlimited articles, webinars and ebooks.

Become A Member

In an effort to erase one legacy of the 2008 housing crisis and prevent thousands of potential foreclosures, the Federal Housing Administration (FHA) on Friday announced that it would begin to sell off distressed mortgages in bulk, the New York Times reports.

The FHA is currently responsible for over 700,000 severely delinquent mortgages — most of which were accumulated between 2007 and 2009. Under this proposal, the agency would aim to sell 5,000 mortgages a quarter.

Selling the delinquent loans will undoubtedly be difficult. Already, the FHA receives 36 cents on the dollar for a foreclosed house and in a pilot version of this program it has sold 2,000 distressed loans.

While no official figures have been announced, according to the Times, the FHA has outlined the program’s qualifications:

To be eligible for the program, loans must be more than six months delinquent and must have been through the administration’s available foreclosure-prevention programs. The loan servicer must have begun the foreclosure process, and the borrower must not be in bankruptcy. Investors would have to halt foreclosure proceedings for at least six months and would have to agree not to sell half the properties for at least three years.

While the foreclosure crisis has been felt nationwide, it’s had a particularly harsh effect on states in the Sun Belt. Last year, 17 of the nation’s top 25 metro areas with the highest foreclosure rates were in Florida. Meanwhile, as explained in a previous Forefront story, federal regulators have taken over more than 70 banks in Georgia since the housing crisis began.

This disproportionately high rate of foreclosures has stifled investment and economic development in the region, and is one reason why decades of unprecedented growth have come to an end.

Tags: economic developmentatlantademographics

×
Next City App Never Miss A StoryDownload our app ×
×

You've reached your monthly limit of three free stories.

This is not a paywall. Become a free or sustaining member to continue reading.

  • Read unlimited stories each month
  • Our email newsletter
  • Webinars and ebooks in one click
  • Our Solutions of the Year magazine
  • Support solutions journalism and preserve access to all readers who work to liberate cities

Join 653 other sustainers such as:

  • Eric at $60/Year
  • Dina in San Francisco, CA at $60/Year
  • Anonymous at $10/Month

Already a member? Log in here. U.S. donations are tax-deductible minus the value of thank-you gifts. Questions? Learn more about our membership options.

or pay by credit card:

All members are automatically signed-up to our email newsletter. You can unsubscribe with one-click at any time.

  • Donate $10 or $5/Month

    Next City notebook

  • Donate $20 or $5/Month

    The 21 Best Solutions of 2021 special edition magazine

  • Donate $40 or $10/Month

    Brave New Home by Diana Lind