FHA will not partake in REO to rental

By Sari R. Updated on 10/4/2012

FHA commissioner Carol Galante just announced that the FHA will not be partaking in an REO-to-rental program similar to that of Fannie Mae.  Galante believes that adopting an REO-to-rental strategy isn’t the best solution for the FHA’s problems, but she acknowledges the importance of some sort of rental strategy.

Currently, there are around 700,000 delinquent FHA mortgages.  Galante thinks the best solution is to sell the notes to these loans.  DebtX is currently the top contender to facilitate the transfers.  For national mortgage buyers, the borrowers can’t be foreclosed on in a time span of under six months.  The FHA is currently unclear about when the sales will take place, but the overarching goal is to relieve around ten thousand delinquent mortgages each quarter.

In spite of all this, there are several conditions that need to be met before the sales happen.  No more than half of the properties can be marketed as vacant foreclosures.  The buyer would need to find another solution such as indicating that the homeowner would be a renter.

The FHA believes that this will be the most innovative strategy it has implemented in the past year and is excited to announce more details soon.

For today's most current mortgage rates, click here.