HUD improperly sold $18B worth of distressed mortgages: audit

Agency didn’t disclose rules and procedures to public, Inspector General says

New York /
Jul.July 26, 2017 01:15 PM

The federal Department of Housing and Urban Development sold 108,000 distressed mortgages to private buyers without giving the public a chance to comment on the program, a new audit by the Office of the Inspector General found.

And increasing criticism over the initiative could pave a legal path for homeowners who have not yet lost their homes to avoid pending foreclosures, the New York Times reported.

HUD sold $18 billion worth of distressed mortgages at auctions during a seven-year period under the Obama administration without publishing “formal guidance” or procedures, the Inspector General found.

Critics have said that private buyers who snapped up the mortgages moved too quickly to foreclose on homes. The biggest buyers include Bayview Asset Management, Lone Star Funds, Angelo Gordon and Selene Residential Partners.

A lawsuit filed by New York-based advocacy group Mobilization for Justice Inc. singled out Lone Star, claiming its mortgage firm, Caliber Home Loans, offered five-year loan modifications that ballooned in the sixth year.

“It is disturbing to me that HUD seems committed to not doing rule making with notice and comment,” said Geoff Walsh, a lawyer with the National Consumer Law Center. “This is consistent with past practice of keeping homeowners out of the picture as much as possible.”

HUD, which under the Obama administration was run by secretaries Shaun Donovan and Julian Castro and is now headed by President Trump’s appointee Ben Carson, released a statement in response to the Inspector General report saying it had put in place rules for the mortgage sales, but acknowledged that they were not “formalized in one single centralized document.”

Attorneys said it would be hard to find a judge who would reopen a completed foreclosure case, but said that homeowners who have not yet faced foreclosure might have recourse by filing a claim against HUD. [NYT]Rich Bockmann


Related Articles

arrow_forward_ios
Affordable housing developers hope the federal government set a floor rate for 4 percent Low Income Housing Tax Credits. (iStock)

Affordable housing developers look to feds for financing fix

Affordable housing developers look to feds for financing fix
New York City District Council of Carpenters’s Monitor Glen McGorty (iStock; LinkedIn)

NYC carpenters union changes how it roots out mob ties

NYC carpenters union changes how it roots out mob ties
The Economic Innovation Group identified 145 real estate investments in Opportunity Zones (iStock)

Real estate deals dominate Opportunity Zones. Is that bad?

Real estate deals dominate Opportunity Zones. Is that bad?
Assemblymember Marcela Mitaynes  and Sen. Charles Schumer (Photos via Protect Sunset Park; Getty; Facebook)

With NY poised to lose billions, socialists fight real estate

With NY poised to lose billions, socialists fight real estate
From left: Edison Properties CEO Robert Selsam, Ironstate Development's Michael Barry, Stellar Management founder Larry Gluck (LinkedIn; Gluck Family Foundation)

These developers could benefit the most from Soho’s rezoning

These developers could benefit the most from Soho’s rezoning
A rendering of Gowanus Green and HPD commissioner Louise Carroll (Rendering via Jonathan Rose Companies)

Massive Gowanus development will be 100% affordable

Massive Gowanus development will be 100% affordable
Union Square and Mayor Bill de Blasio (Getty)

City drops bid to require special permits for Union Square hotels

City drops bid to require special permits for Union Square hotels
(Credit: iStock)

Feds put Neoclassical architecture policy into practice

Feds put Neoclassical architecture policy into practice
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...