Organization makes plea that will benefit originators

by Justin da Rosa26 Jun 2015
The U.S. Conference of Mayors is urging the U.S Department of Housing and Urban Development, Fannie Mae and Freddie Mac to sell non-performing mortgage loans to non-profit organizations instead of Wall Street investors.

In a report entitled Do Hedge Funds Make Good Neighbors?, the Conference of Mayors argue that neighbourhood stability and housing market recovery  are negatively affected when these loans are sold to speculators.

“An initial examination into four of the largest purchasers of HUD and Federal Housing Finance Agency loans has unearthed an array of disturbing business practices, ranging from those that clearly run counter to the goals of homeownership preservation and neighborhood stability to those that break laws, deceive homeowners, and harm taxpayers more generally,” the study claims.

It would be in originators best interest if non-profits – who are intent on rebuilding neighbourhoods – were given first rights to purchase these loans than investors looking to turn a profit.

Non-profit entities endeavouring to preserve home ownership and housing affordability would help create a larger home buying base for originators to tap into.

The report states that roughly 130,000 of these non-performing loans have fallen into the hands of Wall Street hedge funds and private equity firms.

“It is, of course, no surprise that Wall Street speculators prioritize the needs of the community and tenants below returns to investors,” the report states. “While public officials have sought to reassure taxpayers that these purchasers have financial incentives to try to keep families in their homes, the actual program outcomes suggest otherwise.”

COMMENTS

  • by Ray in Seattle | 6/26/2015 10:33:44 AM

    "Non-Profits" like ACORN are now going to be able to buy (At an essentially free price or given from one government agency to another government agency) your government insured FHA mortgages? Then give that house to its "Non-Profit" constituents? Who also are provided funds from YOUR Government - to make the house payment for the low cost housing your Government is giving them.....

    That sounds like a transfer of US Government citizens wealth to a NON-PROFIT group(s) - Which also get their FUNDING from the US Government. These Non-Profits are constantly gaming the system for public funding! A means to funnel and obtain YOUR Governments money into their lives....

    This is WRONG...... Think this through Folks...
    Ray in Seattle

  • by Anne James | 6/26/2015 10:37:25 AM

    How about affecting 'Disparate Impact' positively? Take the speculative aspect out of foreclosesures and sell to Neighborhood Housing non-profits for qualified income buyers will benefit all.

  • by Anne James | 6/26/2015 10:41:49 AM

    It would have to be monitored but we already have downpayment assistance programs so why not sell for the same price to non-profits or county-run housing programs? As long as it's not price-controlled, I can see feeding the lion of 'Disparate Housing Impact' without taxing us.

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