Help Me...I've Fallen Behind on My Payments and I Can't Get Caught Up

Enhancements to HUD’s Distressed Asset Program Give Borrowers More Protection

The U.S. Department of Housing and Urban Development (HUD) on Friday announced significant changes to its Distressed Asset Stabilization (DASP) program meant to offer more protections to borrowers facing foreclosure and increase non-profit participation in purchasing distressed loans.

Under the new rules, loan servicers are required to delay foreclosure on a home for a year and evaluate all borrowers facing foreclosure for participation in the government's Home Affordable Modification Program (HAMP) or a similar loss mitigation program. Loan servicers could previously foreclose on a home six months after they received the loan and were not required to evaluate borrowers for loss mitigation programs, though they were encouraged to do so.

The improvements to the Neighborhood Stabilization Outcome (NSO) sales portion of DASP include giving non-profits a first look at vacant properties, allowing purchasers to re-sell notes to non-profits, and offering a pool of loans for non-profits only.

"These changes reflect our desire to make improvements that encourage investors to work with delinquent borrowers to find the right solutions for dealing with the potential loss of their home and encourage greater non-profit participation in our sales," said Genger Charles, Acting General Deputy Assistant Secretary, Office of Housing. "The improvements not only strengthen the program but help to ensure it continues to serve its intended purposes of supporting the MMI Fund and offering borrowers a second chance at avoiding foreclosure."

The changes come with stronger reporting requirements that include tougher penalties for non-compliance of quarterly reporting requirements, along with a new requirement of those who purchase loan pools to report on borrower outcomes even if a note is subsequently sold after the original purchase.

FHA's single-family note sale program resumed in 2010 as a pilot program allowing pools of loans headed for foreclosure to be sold to qualified bidders that will help bring the loans out of default through some type of loss mitigation. An FHA-backed loan can be include in a pool for sale if the loan is at least six months delinquent and if all loss mitigation options have been exhausted. DASP began in 2012 as a way for FHA to greatly increase the number of seriously delinquent loans for sale and at the same time encourage investment in the communities that were hardest hit by the crisis. Many of the loans are offered for sale as part of geographically-targeted "Neighborhood Stabilizing Outcome" pools, requiring that 50 percent of the loans within a pool that is purchased achieve a neighborhood-stabilizing outcome – which may include holding the property for rent for at least three years if the borrower and servicer are not able to avoid foreclosure.

DASP sales are typically broken into two or more sales – a "National Sale" which consists of loans from across the country, and a "Neighborhood Stabilizing Outcome" in which loans from geographically-targeted areas are sold.

In an update on HUD's single-family loan sale program in mid-March, the Department said that about half of the approximately 79,000 loans sold through the program since 2010 had been resolved via paying the loans current, forbearance agreements, paying the loan in full, a short sale, a third-party sale, or a deed-in-lieu of foreclosure.

• inShare13

Tagged with: DISTRESSED ASSET STABILIZATION PROGRAM FORECLOSURE PREVENTION HUD LOSS MITIGATION

About Author: Brian Honea

Brian Honea's writing and editing career spans 14 years across many forms of media. He served as sports editor for two suburban newspaper chains in the DFW area and has freelanced for such publications as the Yahoo! Contributor Network, Dallas Home Improvement magazine, and the Dallas Morning News. He has written four non-fiction sports books, the latest of which, The Life of Coach Chuck Curtis, was published by the TCU Press in December 2014. A lifelong Texan, Brian received his master's degree from Amberton University in Garland.I've Fallen Behind on My Payments and I Can't Get Caught Up

The Answers Will Be Right After this Prayer Break

1) Is this worth the cost? As Thomas Sowell has written,“Weighing benefits against costs is the way most people make decisions — and the way most businesses make decisions, if they want to stay in business. Only in government is any benefit, however small, considered to be worth any cost, however large.”That sort of thinking is exactly how America ended up with a 17 trillion dollar debt. You often hear politicians from both parties call that “unsustainable.” Another way of putting that is if we don’t focus on what’s worth our money today, we won’t have the money we need for Defense, Medicare and Social Security tomorrow. 

2) Is this good for society? No man is an island and any American who believes he’s a “citizen of the world” should ask himself when the last time was that he spent a great deal of time fretting about how the people of Djibouti are doing these days. This country is like a fish tank. The culture, the economy, the morality, and the corruption all impact your life and will make a big difference in how your kids grow up. If the oxygen in the water gets low, if mosquitoes move in, or if someone drops a spoonful of ammonia in the tank, we all suffer for it. The less we worry about what’s good for all of us economically, morally, and socially, the more of us will end up getting flushed down the toilet in the end.

3) Is this politician fit for office? Paradoxically, Americans say that, “Morals don’t matter,” when it comes to politicians; then they complain incessantly about how corrupt and dishonest Washington has become. Along similar lines, they vote for politicians who’ve never accomplished anything in office and then they bemoan their ineffectiveness and incompetence. There was a time when Americans actually held politicians to a HIGHER STANDARD than the average person. What’s wrong with expecting our politicians to be as moral as a preacher, as honest as an accountant, and as competent as a firefighter? How is it that we hold 18 year old kids fighting in Iraq to a higher standard of behavior and performance than men three times as old that we expect to lead our country?

4) What's the long term impact of this decision? Thomas Paine once said,"If there must be trouble, let it be in my day, that my child may have peace."What happened to that mentality? What happened to preserving Medicare and Social Security so that future generations of America can retire? How about paying off our bills today so our kids don’t end up as debt slaves? What about insuring that Iran doesn’t get nuclear weapons so we don’t end up on a planet full of nuclear-armed basket-case states? Our decisions have to be based on factors bigger than whether the stock market goes up or down tomorrow, which interest group is going to get its panties in a bunch, or which political party benefits from today’s news cycle. Whether you plan for it or not, the future eventually arrives and it belongs to those who prepare.

5) Would God be pleased with what we're doing? If you believe in God, you should DEFINITELY be concerned about whether He approves of what our nation is doing. Even if you don’t believe, this country has been successful in large part because of Judeo-Christian ethics, a puritan worth ethic, and Christian philosophy. Maybe you don’t like all of Christianity or maybe you think parts of it are oppressive and silly, but that doesn’t change the fact that it has borne fruit for America. At the end of the day, even if you don’t know how a light switch works, you should still be able to appreciate the fact that if you flip it, a light comes on.

John  Hawkins Townhall.com  June, 2014