The Federal Housing Administration (FHA) has opened the bids for its Sept. 12 sale of 5,000 nonperforming formerly insured FHA loans and the results are “very, very positive,” acting commissioner Carol Galante said.
The commissioner also said the agency will do more of these large note sales where the investors are required to hold off foreclose for six months.
She told members of the National Association of Federal Credit Unions that distressed note sales save the FHA mortgage insurance fund the expense of holding the notes all the way through the foreclosure process. And it can help the homeowners.
Since the notes are purchased at a deep discount, the buyer can afford to do a principal reduction modification and refinance the existing borrower at a profit.
The sales will have a positive impact on the insurance fund and “also help homeowners at the same time,” Galante said Friday morning.
FHA has not revealed the winning bidders for the Sept. 12 note sale yet.
The FHA commissioner also noted that the agency has revamped its condominium approval process.
Galante indicated the agency has relaxed its condo requirements so that more units would be eligible for FHA financing.
She discussed the changes with a group of Realtors on Thursday.
Their reaction was “quite good and I think this will be very good” for moderate-income and first-time homebuyers.
FHA issued the condo approval mortgagee letter (2012-18) on Sept. 13.