A federal initiative to auction delinquent mortgages to private groups is giving an unfair advantage to for-profit investors competing against community organizations that are trying to keep people in their homes, a new report shows.
About 10,000 home loans in Florida have been auctioned off since the U.S. Department of Housing and Urban Development created the Distressed Asset Stabilization Program in 2012. The mission of the program was to give private groups a chance to acquire the loans at a discount. By purchasing the mortgages at a reduced price, the investors presumably would be more likely to modify the loans and allow borrowers to avoid foreclosure.
But a report released this week by the Center for Popular Democracy and the Right to the City Alliance shows for-profit companies won most of the auctions with high enough bids to reduce the flexibility to negotiate with the homeowners, according to the Palm Beach Post. Only three of the 26 firms buying the loans are nonprofits.
“We’re seeing an unprecedented rise of the corporate landlord, and HUD’s Distressed Asset Stabilization Program is just facilitating the process,” Right to the City Alliance executive director Rachel LaForest said. [Palm Beach Post] — Eric Kalis