The Federal Housing Administration is expediting its REO sales via an expanded pilot program with 11 participating servicers.
These servicers are selling the single-family properties once they complete the foreclosure process. These
Since the 1990s, FHA servicers have conveyed title to the agency and handed the REO properties over to FHA-approved contractors that manage and sell the REO.
In calendar year 2012, servicers conveyed between 23,400 to 28,600 REO properties per quarter to FHA.
The Federal Housing Administration started the pilot program in 2011 that bypasses its management and marketing program. FHA sets the reserve price slightly below the outstanding unpaid principal balance of the loan.
Nearly 1,500 of these “third-party sales,” as FHA calls them, were completed in the fourth quarter to 2012.
“This method of disposing of these properties is expected to yield lower losses for the Mortgage Insurance Fund than selling them through FHA’s normal REO disposition process—as carrying costs associated with preserving, managing, and marketing an REO property were eliminated,” FHA commissioner Carol Galante told a congressional panel earlier this this year.
In late April, FHA expanded the pilot program to include 11 servicers. The agency is planning a national rollout of its third-party sales later this summer.
