HUD speeds claims process
November 19, 2002
Expects loan disposition project to save Fed $34 million
Inman News Features
The U.S. Department of Housing and Urban Development sold 5,100 mortgages representing $468.4 million in unpaid principal at its first single-family loan sale.
The sale was using HUD's Accelerated Claim Disposition demonstration project, which it estimates could save the government approximately $34 million.
The demonstration project is designed to increase financial recoveries to the FHA insurance fund, according to Assistant Secretary for Housing/Federal Housing Commissioner John C. Weicher. "In the demonstration, loans that are almost certain to be foreclosed will be sold to a joint venture partnership, which will be managed by a private-sector entity," he said. "The entity will decide on the most financially viable option to dispose and/or restructure the loans, which may enable some families to remain in their homes."
The ACD project provides HUD with greater flexibility for modifying the single-family claim and property disposition process and maximizes recoveries on claims paid.
HUD says it will use its new authority to: pay a claim upon assignment of the mortgage, rather than upon conveyance of the property; transfer assigned mortgage loans to private parties for servicing, restructuring, foreclosure, property management and asset distribution; and enter into joint ventures with private entities for asset disposition.
HUD also hopes the program will shorten the time in which servicers can file a claim for default, address defaults by aligning private sector interests with its objectives, reduce its real-estate-owned portfolio and increase the value of single-family assets and recovery.
The ACD program was authorized in HUD's fiscal year 1999 appropriations bill, which gave the department greater flexibility in choosing how to pay insurance claims and dispose of acquired notes and properties. A specified number of FHA servicers have been selected by HUD to submit defaulted single-family loans to the department for payment of an accelerated claim. These servicers include: Countrywide Home Loans, Wells Fargo Home Mortgage, Cendant Mortgage Corp. and Chase Manhattan Mortgage Corp.
Copyright: Inman News Service