Market Watch: Consumer watchdog blasts government’s loan sales program — says it has ‘no rules’ in place to help people save their homes
Some Americans were left worse off after their mortgages were sold to private-equity firms by the Department of Housing and Urban Development.
That’s according to a report released by the U.S. Government Accountability Office, which this month released a new analysis of HUD’s Distress Asset Stabilization Program. That program has overseen the sale of roughly 111,000 loans insured by the Federal Housing Administration, which were valued at around $19 billion, between 2010 and 2016. The loans, which were in default at the time of the various auctions run by HUD, were auctioned off in bulk sales. The buyers of the loans were largely comprised of private-equity firms and hedge funds.
In more recent years, however, the FHA altered the program to sell a greater number of loans to nonprofits in addition to private-equity firms and hedge funds. The logic behind this move: Nonprofits are more interested in keeping people in their homes, consumer advocates say. What’s more, studies show foreclosures can hurt house prices in the community.