HUD REO Sales Near 88K in FY2010
The Federal Housing Administration acquired 98,349 REO properties and sold 87,709 during its fiscal year that ended on Sept. 30, according to a report on the FHA mortgage insurance program released this week.
FHA’s REO acquisitions cost the program $11.4 billion, and the Housing and Urban Development subsidiary made $5.7 billion for the properties it sold. The average loss on HUD REO was $76,000. The surplus of REO properties on the FHA’s books numbered 10,640 at the end of September, according to the FY2010 FHA Annual Management Report.
According to a second report issued this week, the FHA completed nearly three loss mitigation actions for each foreclosure claim HUD paid in FY2010. In other words, only 27% of defaulted FHA mortgages resulted in a completed foreclosure and the property becoming a HUD REO, according to the FHA’s FY2010 actuarial report to Congress on the financial status of the Mutual Mortgage Insurance Fund.
Some of that foreclosure avoidance came in the form of record levels of short sales and deeds-in-lieu of foreclosure transactions. FHA completed 20,200 of these preforeclosure transfers in FY2010, compared to 8,736 in FY2009.
In addition, at the end of September, the FHA had 20,959 pending preforeclosure transfers; though the FHA acknowledged that not all of these “open actions” will be successful in either curing the default or otherwise avoiding foreclosure.
While the level of preforeclosure transfers are up 230% from 2009, that level is only a fraction of the more than 301,000 assisted cures FHA servicers executed through repayment plans, loan modifications, and partial claims. An additional 155,000 distressed FHA borrowers are currently working toward a loss mitigation solution to their defaults.