The Federal Housing Administration (FHA) in early December will seek bids on a small pool of defaulted single-family loans and plans to conduct additional auctions in April and September of next year.

The auctions feature nonperforming loans where servicers have exhausted all loss mitigation options and the borrowers are one step away from foreclosure.

Bids on an $18 million loan pool are due Dec. 7, according to an FHA notice.

The 100 nonperforming loans are stripped of insurance with a requirement that the bidder not foreclose for at least six months.

The last single-family loan sale, which came on Sept. 14, involved 286 mortgages with an unpaid principal balance of $41.4 million and a broker price opinion (BPO) of $26.2 million.

Bayview Asset Management topped five other bidders with a winning bid of $14.5 million or 35% of the UPB on the pool. Bayview is a nonperforming loan investor and specialty servicer based in Coral Gables, Fla.

Since the loans are acquired at such steep discounts, FHA hopes the buyers will refinance the existing homeowners and prevent foreclosures.

The loan sales initiative is intended to keep homeowners in their homes and reduce claim costs by minimizing the time that assets are held, according to FHA.

 

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