The Department of Housing and Urban Development couldn’t find a buyer for $450 million worth of the shoddy mortgages it’s been auctioning off in the wake of the financial meltdown.
HUD decided the bids it received at an Oct. 30 auction of the mortgages were too low to accept, according to a Bloomberg report. HUD has sold about 50,000 underperforming mortgages since 2010 to investors who were willing to assist homeowners in keeping their homes or rehab the properties to resell, Bloomberg reported.
“If you can get someone who’s willing to take these notes and fix the properties and rent them out or transfer them to a nonprofit, the idea is that you’re not hurting places that have been hit hard by foreclosures,” former HUD policy advisor Andrew Jakabovics told Bloomberg. “It’s about striking that balance but also making sure that they’re not giving properties away far below what the value is.”
HUD is attempting through the sales to limit losses at the Federal Housing Administration while simultaneously helping homeowners to avoid foreclosure. The sales also give FHA an opportunity to recoup more of their losses on the mortgages than they might if the homes were foreclosed upon. HUD’s refusal to accept any of the bids on the latest batch of mortgages might indicate that FHA has hit the wall on the losses it was willing to accept to keep troubled buyers in their homes, Bloomberg reported.