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HUD refuses offers on $450M in distressed loans
Federal agency rebuffed the offers at an auction last month -- for the first time ever
In a first for the U.S. Department of Housing and Urban Development, the agency found bids for about $450 million in distressed Federal Housing Administration mortgages were too low to be accepted at an auction late last month.
The denial of bids could mean that FHA is now at its limit on the losses it is willing to realize in an attempt to keep underwater borrowers in their homes, Bloomberg News reported. HUD has sold roughly 50,000 FHA-insured single-family homes to investors over the past three years.
The Oct. 30 auction offered loans sorted based on geography and debt to valuation ratio. The mortgages in question were in the most distressed pool of assets on offer, according to Bloomberg.
HUD offers the loans at a steep discount, assuming the buyer will modify the terms for the underwater borrower.
The next national auctions for non-performing loans will take place Dec. 10 with a $5 billion round — the largest sale yet, Bloomberg News said. [Bloomberg News] — Mark Maurer