The first sale is slated for Oct. 30 and investors will be asked to bid on approximately 10,600 loans, according to Kingsley Greenland, president and chief executive of DebtX.
“There will be large pools, small pools and some pools will be linked so investors can bid across pools,” Greenland said. DebtX is marketing the FHA loan sale and SEBA Professional Services LLP is managing the sale.
The DebtX CEO noted that the sale is designed to increase pricing for FHA and increase investor participation.
The second FHA sale scheduled for Nov. 20 will feature 13,400 nonperforming loans. Investors can review the loan files at DebtX via technology.
“Our user-friendly technology makes it possible to offer 29,000 loans on a sealed bid basis to so many investors,” Greenwood said.
The Oct. 30 and Nov. 20 sales are called “National Sales.” Under the terms of those sales, the successful bidders cannot foreclose for six months. This restriction is designed to give the new servicer a chance to restructure the loan and keep the borrower in their home.
The FHA held its last “National Sale” on June 26 when it accepted bids on nearly 15,470 nonperforming loans with an unpaid principal balance of $2.4 billion. The winning bids totaled $1.26 billion or 53.4% of the UPB of the loans, which are no longer insured by FHA. There were 13 pools and eight winning bidders.
On Dec. 10, FHA will conduct another Neighborhood Stabilization Outcome note sale of approximately 5,000 nonperforming loans. Winning bidders of NSO pools cannot foreclose for six months. But they also face other restrictions. Half of the nonperforming loans purchased must achieve Neighborhood Stabilization Outcomes, such as a successful loan modification, a short sale to another owner-occupant or holding the property as a rental for a period of three years.