HUD opens bidding for latest vacant-loan sale

The Department of Housing and Urban Development has announced a December vacant-loan auction for properties secured by Home Equity Conversion mortgages.

HVLS 2026-1 goes on sale on Dec. 9 and consists of first liens secured by Federal Housing Administration-backed HECMs, where borrowers and their spouses are deceased. 

Total unpaid balance for the pool of loans is estimated at $352 million, with 1,167 mortgages included in the auction, all of which are secured by single-family residential units that currently stand vacant. The bidder qualification process began on Oct. 30. 

Eligible bidder parties for the loan-sale auction are nonprofit organizations and their joint ventures or similar entities partnering with government agencies. Governmental entities and for-profit organizations are also eligible. Individuals and entities debarred or suspended from working with HUD are prohibited from participating.

While HUD previously dedicated a certain percentage of properties specifically for nonprofits, it mentioned no specific provision for HVLS 2026-1. 

Geographic makeup of HVLS 2026-1

Properties offered in HVLS 2026-1 are spread across the U.S., found in 46 states, Puerto Rico and the District of Columbia. Florida, Texas and California delivered the highest number of units available for auction at 141, 115 and 102, respectively. The largest balance from any individual jurisdiction was California's $41.7 million, comprising an 11.9% share of the total pool. 

The latest announcement comes off of two recent vacant HECM sales in the third quarter, after an auction of 1,600 loans with balances of $444 million in August. It was followed by a subsequent sale of over 1,900 HECMs the following month whose balances totaled $550 million. 

HUD regularly sells off loans to qualified buyers to help mitigate losses to the Federal Housing Administration's insurance fund and help increase housing supply. At the end of fiscal year 2024, HUD's MMIF net worth came in at $172.8 billion with a capital ratio of 11.5%, well above the required minimum of 2%. 

The current offer also arrives as the longest government shutdown in history dragged into its sixth week, with the current impasse significantly slowing many federal operations, including services coming through HUD and associated agencies. Endorsements of FHA-backed home equity conversion mortgages are currently suspended, but companies can still originate them and hold them in their books until the government reopens. 

Several lenders previously said they made contingency plans for the shutdown, specifically pertaining to expected slow response times that would impact FHA originations. The agency operates as a unit within HUD.

Services from the U.S. Department of Agriculture, which also offers mortgage programs, remain suspended.