July 25, 2024
![FHA/HUD](https://www.fhanewsblog.com/wp-content/uploads/2016/08/153-hud.jpg)
The U.S. Department of Housing and Urban Development (HUD) has proposed a new rule to oversee the sale of delinquent single-family mortgage loans insured by the Federal Housing Administration (FHA).
This initiative aims to increase the availability of affordable housing and enhance community stability.
According to HUD.giv, this move is part of the Biden-Harris Administration’s commitment to “expanding affordable housing options,” and the proposed rule is intended to assist struggling homeowners.
Assistant Secretary for Housing and Federal Housing Commissioner Julia Gordon was quoted in a HUD press release about the proposed rule.
Gordon notes the proposed rule is meant to create stability. It establishes standardized regulations for future delinquent home loan sales and prioritizes neighborhood stabilization.
HUD has been experimenting with selling off delinquent mortgages since 2002. The July 2024 proposal is meant to be a transition from a demo to a permanent program.
The proposed rule includes changes requiring all delinquent loan purchasers “to adhere to mission-oriented post-sale requirements,” including a first-look option for owner-occupiers and nonprofits.
HUD’s proposed final rule also includes language permitting preference for selling FHA mortgages to nonprofit organizations and governmental entities.
HUD created this final rule to respect its twin goals of managing HUD’s financial responsibility to the Mutual Mortgage Insurance Fund “while promoting mortgage loan outcomes that align with its mission,” according to the official site.
The FHA and HUD want to help FHA borrowers who experience economic hardship while simultaneously “promoting homeownership opportunities for new owner-occupants of foreclosed properties, encouraging the conversion of properties into affordable for-sale and rental homes, and safeguarding neighborhoods against vacancy and blight.”
The rule discussed above is not the current FHA and HUD policy. HUD must implement it, but before that can happen, there is a public comment period, as there is for all such proposed final rules.
According to the HUD official site, the public may comment on its proposal, “including responses to specific questions outlined in the notice, “until September 16, 2024.