The U.S. Department of Housing and Urban Development (HUD) on Friday announced significant changes to its Distressed Asset Stabilization (DASP) program meant to offer more protections to borrowers facing foreclosure and increase non-profit participation in purchasing distressed loans. This enhancements for HUD’s Distressed Asset Program will provide borrowers more Protection.
Under the new rules, loan servicers are required to delay foreclosure on a home for a year and evaluate all borrowers facing foreclosure for participation in the government’s Home Affordable Modification Program (HAMP) or a similar loss mitigation program. Loan servicers could previously foreclose on a home six months after they received the loan and were not required to evaluate borrowers for loss mitigation programs, though they were encouraged to do so.
Three of the nation’s largest mortgage lenders have put sizable packages of nonperforming and reperforming mortgage loans on the market for investors to buy, according to New York Mission Capital Advisors.
Bank of America has put up approximately $2.56 billion worth of delinquent debt for sale, including nonperforming loans, reperforming mortgages (those in which the borrower was 90 days or more behind but has resumed making payments), and home equity lines of credit (HELOCs), according to Mission Capital.
Citigroup has put up $1.8 billion worth of reperforming mortgages for sale, and JPMorgan Chase is looking for a buyer for $143 million worth of nonperforming mortgage loans, Mission Capital said. Last month, Freddie Mac announced that it intended to sell $410 million worth of delinquent mortgage loans. But there has been so much of a demand that the suppliers cannot keep up, Mission Capital said.
The Federal Housing Finance Agency (FHFA) indicated in its report on foreclosure prevention for Q2 2014 released on September 24, that Fannie Mae and Freddie Mac prevented nearly 80,000 foreclosures nationwide in the second quarter, raising the total number of foreclosures prevented since the start of the conservatorship in September 2008 to 3.3 million.
The measures taken by the two GSEs to prevent foreclosures have helped about 2.7 million borrowers remain in their homes in the last six years, with approximately 1.7 million of those borrowers receiving permanent loan modifications. The number of foreclosures prevented is down 10 percent from Q1, when GSE measures stopped almost 89,000 foreclosures.
FHFA reports as well that about 37 percent of those who received permanent loan modifications were able to reduce their monthly payments by more than 30 percent in second quarter.