HUD Proposes New Rules Around Sale Of Delinquent Loans

Seriously delinquent single-family mortgage loans insured by the Federal Housing Administration (FHA) could be sold according to a new set of rules proposed by the U.S. Department of Housing and Urban Development (HUD) this week.

The new requirements, subject to a 90-day comment period, would direct purchasers of these loans to provide exclusive first-look opportunities to owner occupants, non-profit organizations and government entities.

“Today’s proposal creates a permanent, standardized set of rules for note sales in the future that incorporates our learnings from previous sales that have taken place as part of the demonstration program,” said Assistant Secretary for Housing and Federal Housing Commissioner Julia Gordon. “The new rules underscore the importance of loss mitigation and promote owner occupancy and neighborhood stabilization.”

Sales of delinquent mortgages have been tested by HUD since 2002, and this week's action confirms the department is considering making it a permanent, mission-oriented program. 

The program proposal is designed to expand affordable housing opportunities and improve community stability. Officials said it would also enable HUD to continue prioritizing awarding these mortgage loans to community groups that serve families in need. 

“This proposed rule will help struggling homeowners, stabilize neighborhoods, and make more affordable homes available for the people we serve,” HUD Acting Secretary Adrianne Todman said. 

The full proposal can be read here and HUD is requesting public comment on its proposal by September 16, 2024. Comments can be submitted and viewed here.