Is the FHA Distressed Asset Stabilization Program Meeting Its Goals? Nearly 2 Million Remain at Risk of Foreclosure

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Is the FHA Distressed Asset Stabilization Program Meeting Its Goals? Nearly 2 Million Remain at Risk of Foreclosure

Is the FHA Distressed Asset Stabilization Program Meeting Its Goals? Nearly 2 Million Remain at Risk of Foreclosure

Nearly 2 million homeowners remain at risk of foreclosure because of reduced income, underwater loans, or the failure of mortgage servicers to assist them properly.


Center for American Progress-

In the summer of 2012, the Federal Housing Administration, or FHA, announced it was launching a new program to auction off pools of delinquent mortgages that had not yet gone through foreclosure but for which foreclosure was inevitable.

According to FHA, selling these loans prior to foreclosure would save the agency money and provide a better financial outcome for taxpayers. Selling would also provide homeowners more options than were available under FHA rules due to statutory limitations, helping families and stabilizing neighborhoods. In short, the Distressed Asset Stabilization Program, or DASP, “creates the opportunity for everyone—the homeowner, the new mortgage holder, FHA and the community—to walk away a winner.”

Since September 2012, FHA has made available for auction nearly 100,000 loans. According to the Department of Housing and Urban Development’s, or HUD’s, new report on DASP outcomes, the program has helped reduce FHA’s loss rates from 63.5 percent in the first quarter of 2010 to 52.9 percent in the second quarter of 2014, although the report does not disaggregate the impact of a variety of FHA policy changes, including improvement of its loss-mitigation options for servicers. Additionally, bids on these auctions have risen from approximately 40 percent of the loans’ unpaid principal balances to an average closer to 60 percent.

[CENTER FOR AMERICAN PROGRESS]

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One Response to “Is the FHA Distressed Asset Stabilization Program Meeting Its Goals? Nearly 2 Million Remain at Risk of Foreclosure”

  1. Charles Reed says:

    The are talking about a parlor trick when talking about doing something before the foreclosure through the FHA, because FHA does not originate these loan nor do they purchase the loans. FHA is not a lender and these program are hiding the fact that the Ginnie Mae MBS system is fatally flawed!

    The FHA is buying the properties from the issuers/lenders who cannot now go into court and simply administratively foreclose because the lender long ago relinquished the blank endorsed Note when the loan was placed into the MBS!

    Ginnie Mae is up to its eyeballs in corruption!

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