Brief Selling HUD’s Nonperforming Loans: A Win-Win for Borrowers, Investors, and HUD
Laurie Goodman, Dan Magder
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At the beginning of the financial crisis, borrowers of FHA-insured loans generally had to begin foreclosure proceedings if they failed to pay their mortgage for a long period and had exhausted all modification and foreclosure alternatives. Reducing the principal on underwater mortgages was not allowed for FHA-insured loans, and short sales tools were limited. In 2010, HUD began selling these distressed loans to investors who could offer borrowers more options. This option, the Distressed Asset Stabilization Program (DASP), has increasingly come under fire. This brief explores concerns and concludes that DASP is a win-win for borrowers, investors, and HUD.
Research Areas Housing finance Housing
Tags Federal housing programs and policies Housing and the economy Single-family finance Homeownership Finance
Policy Centers Housing Finance Policy Center