HUD Auctioning Delinquent Chicago Mortgages

August 23, 2012

hud foreclosure auction chicagoChicago is one of five cities in which pools of homes with non- performing, federally insured home loans will be sold at auction next month, as the federal government tries to decrease losses from escalating foreclosures.

In total, $1.7 billion in US. Department of Housing and Urban Development loans (9,442 loans with an average balance with $182,000) will be on the auction block on September 12 in Chicago, Newark, New Jersey, Phoenix and Tampa, and will be auctioned in pools by Washington-based financial adviser, SEBA Professional Services, and Boston-based online loan-auction service, Debt Exchange Inc. (DebtX), who were hired HUD to do the auctions.

“There is pent-up demand in the investor community to acquire assets in bulk,” said Kingsley Greenland, Chief Executive Officer of DebtX, in a recent statement.

Next month’s sale of Chicago mortgages is the first of more to come in the bulk-sale program by the Federal Housing Administration (FHA), the HUD agency that insures loans to first-time homebuyers and other borrowers with limited funds for down payments. The FHA has been selling homes in bulk since 2010, with “a pilot program that offered buyers as much as 65 percent off unpaid loan balances with the understanding that they would write down debt and modify terms to help borrowers keep their homes,” according to the Bloomberg article, “HUD to Auction $1.7 Billion in Delinquent Home Mortgages.”

Statistics from the Mortgage Bankers Association cited in the article show that the foreclosure rate for FHA loans was about nine percent. The rate for all home loans is 7.3%. FHA loans were also the only type that increased in  the last quarter.

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