For the first time, the Department of Housing and Urban Development is selling notes secured by unoccupied one-to-four homes.
The HUD-Held Vacant Loan Sale 2017-1 is made up of five regional pools consisting of approximately 1,700 notes with a balance of $360 million. The sale is scheduled for Nov. 30.
The pool geographies are Northeastern U.S., Western U.S., Southeastern U.S., Southern Florida and Southern California.
The Federal Housing Administration came into possession of these notes when the last surviving borrower on a Home Equity Conversion Mortgage died. At that point the loan became due and payable, but the family elected not to pay the amount due.
At that point, the lender files a claim with the FHA, which then paid the lender in exchange for the note. The properties are not in foreclosure. It will be the note purchaser's responsibility to foreclose on the property, but since the family has already passed on its opportunity to repay the loan, they do not have to be contacted, a HUD spokesman said.
