Well it has been a while since I have written an article so I decided I’d write one today. It seems like the Federal Housing Administration (FHA) is looking to ramp up its Distressed Asset Disposition Program. Currently the FHA has over 700,000 delinquent loans on its books so to cut down on the backlog they created a program in which they sell mortgages to investors.
Well according to the FHA, the program was a success in its pilot program to sell 2,000 mortgages that now they have decided to ramp up the sales. Starting in September, the FHA will be selling 5,000 mortgages per quarter. The new investors will be required to continue efforts in keeping the owner in the property and cannot foreclose for at least six months. According to the FHA, more options can be provided to distressed homeowners by going this route. Other options include deeding the property back to the investor in which the previous owner can rent-to-own in three years.
So what do you think? Is this really a way to help distressed homeowners or another way to sell properties to corporate buyers? I want to hear your thoughts so please leave a comment below.
Last week Bank of America announced it is launching a pilot program to rent properties to delinquent homeowners. If you have been a reader and follower of West County Blog, this will come to you as no surprise since I posted an article back in December discussing Bank of America preparing for this type of program.
The first pilot program will affect just under 1,000 homeowners and Bank of America will be targeting homeowners that are 60+ days past due and who cannot qualify for any type of loan modification.
How the program will work, the homeowner must first give title of the property back to Bank of America. Bank of America will forgive the debt owed and the now former homeowner will be allowed to rent the property for up to three years at or below current market rental rate. In addition, the former homeowner will be relieved of property taxes and homeowner’s insurance.
The program is called “Mortgage to Lease” and is currently targeting homeowners in Arizona, Nevada and New York. Some homeowners have already reported being contacted by Bank of America. Right now, the program is being conducted on a solicitation basis, homeowners cannot request or apply.
The first pilot transaction in which investors can buy foreclosures in the Foreclosure-to-Rental initiative was launched today. The Federal Housing Finance Agency (FHFA) has a package of 2,500 properties in 6 major cities and has begun taking bids from qualified investors. These homes are a mix of both Fannie Mae and Freddie Mac properties.
These qualified investors must submit their applications along with proof to demonstrate they have the capability of turning these properties into rentals for the next 3 years. The Foreclosure-to-Rental program was announced last year and it was estimated to begin in March 2012. Well it began just a few days before March.
For a history on this Foreclosure-to-Rental program, check out the following: