The Federal Housing Administration is streamlining its short-sale program and its plans to introduce the changes before the end of June.
“This change is expected to increase the number of defaulted loans that end in short sales rather than foreclosures,” FHA commissioner Carol Galante testified on June 4.
FHA servicers completed 8,850
The report shows that FHA recovers 55.5% of the unpaid principal balance on a loan in a short sale, compared to 35.5% of the UPB in a REO sale.
Short sales “yield better results” for the FHA mortgage insurance fund “while allowing distressed borrowers to start anew without having to go through the difficult and costly foreclosure process,” according to Galante’s testimony.
FHA also plans to launch a “large-scale” marketing effort to promote loan modification and short-sale strategies for delinquent borrowers.
