New HUD Proposed Final Rule on the Sale of Delinquent FHA Home Loans
July 25, 2024
The U.S. Department of Housing and Urban Development issued a proposed new rule in July 2024 that is intended to be a permanent policy regarding the sale of delinquent FHA single-family mortgage loans.
The new rule aims to make affordable housing more available and “enhance community stability.”
In a press release on the HUD official site, HUD Secretary Adrianne Todman emphasized the Biden-Harris administration's commitment to “expanding affordable housing options.” The proposed final rule will help increase the availability of affordable housing.
Assistant Secretary for Housing and Federal Housing Commissioner Julia Gordon notes the proposed rule establishes permanent, standardized regulations for future sales of delinquent FHA loans, incorporating lessons from previous sales under the demonstration program.
The new proposed rules make loss mitigation, owner occupancy, and neighborhood stabilization major priorities for the program.
According to the press release, HUD and the FHA tested the sales of delinquent mortgages starting in 2002. The new rule represents a move away from the temporary program and toward a more permanent option.
Under the proposed rule, all delinquent FHA loan sales must abide by what HUD calls post-sale requirements. These requirements include:
The goal of the new proposed final rule is to help FHA borrowers facing economic hardships while “promoting homeownership opportunities for new owner-occupants of foreclosed properties, encouraging the conversion of properties into affordable for-sale and rental homes, and safeguarding neighborhoods against vacancy and blight.”
The proposed rule discussed above is not yet finalized.
It is (at press time) in a public comment period, which is typical of such new rules. According to HUD, the public can comment on this rule until September 16, 2024.
------------------------------
RELATED VIDEOS:
Sometimes It Pays to Refinance
Don't Forget Your Closing Checklist
Your Home Loan is Called a Mortgage
The new rule aims to make affordable housing more available and “enhance community stability.”
In a press release on the HUD official site, HUD Secretary Adrianne Todman emphasized the Biden-Harris administration's commitment to “expanding affordable housing options.” The proposed final rule will help increase the availability of affordable housing.
Assistant Secretary for Housing and Federal Housing Commissioner Julia Gordon notes the proposed rule establishes permanent, standardized regulations for future sales of delinquent FHA loans, incorporating lessons from previous sales under the demonstration program.
The new proposed rules make loss mitigation, owner occupancy, and neighborhood stabilization major priorities for the program.
According to the press release, HUD and the FHA tested the sales of delinquent mortgages starting in 2002. The new rule represents a move away from the temporary program and toward a more permanent option.
Under the proposed rule, all delinquent FHA loan sales must abide by what HUD calls post-sale requirements. These requirements include:
- A "first-look" option for owner-occupants, nonprofit organizations, and government entities “when properties associated with the purchased notes are sold.”
- The proposed rule is designed to let HUD award such loans to nonprofits and government entities.
- The new rule includes guidelines for direct sales to these buyers.
The goal of the new proposed final rule is to help FHA borrowers facing economic hardships while “promoting homeownership opportunities for new owner-occupants of foreclosed properties, encouraging the conversion of properties into affordable for-sale and rental homes, and safeguarding neighborhoods against vacancy and blight.”
The proposed rule discussed above is not yet finalized.
It is (at press time) in a public comment period, which is typical of such new rules. According to HUD, the public can comment on this rule until September 16, 2024.
------------------------------
RELATED VIDEOS:
Sometimes It Pays to Refinance
Don't Forget Your Closing Checklist
Your Home Loan is Called a Mortgage
Do you know what's on your credit report?
Learn what your score means.
