Federal Housing Administration Acting Commissioner Carol Galante told a crowd of mortgage professionals her institution will not immediately initiate an REO-to-rental program similar to Fannie Mae.
The Federal Housing Finance Agency recently completed many sales of REO and is now announcing winning bidders. HousingWire had that information more than one month ago.
"Looking at an REO-to-rental strategy, and while a rental strategy is very important, we decided it wasn't the best solution for the FHA, servicers, borrowers and their communities," Galante told the crowd at the HousingWire REperform conference underway in Dallas, Texas.
Galante added there are 700,000 delinquent mortgages in the FHA portfolio. A better solution to work through these loans, she said, is to sell the notes. DebtX will likely facilitate the transfers, she said.
For national buyers of the mortgages, the borrowers can not be foreclosed on in under six months.
Galante didn't give a time frame on when the sales will take place. And the FHA has sold portfolios of mortgages in the past. Galante said the aim is to offload about 10,000 delinquent mortgages per quarter.
There are other conditions, Galante said. For example, no more than 50% of the properties can be put on the market as a vacant foreclosure. The buyer needs to put in place another solution, and in such a case leaving the homeowner as a renter would be acceptable.
"This is the most innovative strategy we've utilized in the past year," Galante said, adding the FHA will announce more details soon.