Wednesday, June 13, 2012

FHA Distressed Asset Stabilization Program

So this September the FHA has announced that they will start a distressed asset stabilization program to help keep people in their properties.

They will allow banks to sell pools of high risk loans that are at least 6 months delinquent if the homeowner is not in bankruptcy. In order for the banks to sell these loans to investors they must have exhausted all steps in the FHA's loss mitigation procedure and already started the foreclosure process.

They have regulated what you note buying investors do. At purchasing these notes you must work with the buyer for at least 6 months to find creative or flexible solutions that FHA does not typically offer. No more than half of these properties can become REO properties "foreclosed on and owned by you the investor/note buying bank". And you as the investor have to hold the loan for at least 3 years if the note can not be brought out of default. So you better buy these right if you are required to hold the other half of the properties that can not become an REO for 3 years with potentially not getting a single payment from the homeowner.


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