October 19, 2021

MP Now News

Mortgage News

HUD Announces November Single Family Note Sale Made Up of Reverse Mortgage Properties

The US Department of Housing and Urban Development (HUD) announced Thursday that it passed away on 10th of the borrower and not survived from a non-borrowing spouse (NBS).

“On November 10, 2021, HUD will offer several residential real estate mortgage pools consisting of around 1,700 bonds and a loan balance of around $ 417 million,” HUD describes in the event list on its website. “The sale will consist of loans due and payable from Secretary-Held. The loans are mortgages secured by vacant residential properties of 1 to 4 units, with the last surviving borrower having died. This sale will include more bidding opportunities for nonprofit and state and local government buyers. “

Properties, all of which are secured by HECMs, the move corresponds to the housing policy intentions of the Biden administration

The announcement of the sale gives a slightly more accurate number of bonds made available, as it is all real estate that came from reverse mortgage loans where the borrower has now passed away.

“The sale includes approximately 1,730 reverse mortgage letters backed by real estate where the borrower died rather than survived by a non-borrowing spouse,” HUD said in its announcement. “Consistent with the September 1, 2021 announcement by the Biden Harris Administration that more HUD-owned property will be returned to future owner-occupation, HUD will bid up to 50% of the debt in the multi-loan pools for bid first of the beneficiaries offer non-profit organizations and units of state and local government. In previous sales, around 10% of the promissory notes were prioritized for this purpose. “

The White House’s September 1 announcement – without specifically mentioning reverse mortgage-backed real estate – outlined the Biden government’s intention to enter the home investment sector, leveraging the government’s sizeable authority and stash of the government’s housing authority to maintain availability to influence the housing supply and its interactions with high demand.

“The large and long-standing gap between the supply and demand for affordable housing for tenants and homeowners makes it difficult for families to buy their first home and drives up rental costs.” said the White House on September 1st. “Higher housing costs also crowd out other investments that families can and should make to improve their lives, such as investing in education.”

With supply bottlenecks worsening across the country over the summer, larger investors have accelerated their home purchases, including in urban and suburban areas. According to Redfin data cited by the White House, every sixth home bought in the second quarter of 2021 was purchased by investors, with certain reports suggesting the number will climb to one in four in some markets.

“When it comes to investor purchases, typically more than 35% of purchases are made by investors who own more than ten properties,” the White House said. “The purchase of single-family homes by major investors and the conversion into rental properties are accelerating the transition from owner-occupied housing to rental apartments and driving up house prices for lower-cost houses, which makes it difficult for, among other things, prospective first-time buyers and first-generation home buyers to buy a house. “

It’s also unlikely that these transitions would make any sense to complement housing supply in lower-cost parts of the rental market, as investors generally charge more for rent to offset their higher acquisition costs, according to the White House.

What this step has to do with the White House agenda

In Thursday’s announcement, HUD said very bluntly that this sale is specifically aimed at expanding the supply of affordable housing.

The official HUD portrait of Lopa P. Kolluri, Principal Deputy Assistant Secretary for the Housing Office and FHA SKIN | CC0
Lopa P. Kolluri, Deputy Assistant Secretary of the Housing Office and FTA

“The sale is aimed at increasing the supply of affordable housing, expanding home and rental options, and revitalizing communities through the disposition of these notes,” the White House said. “[This includes] Selling property to low to middle income homebuyers at a price affordable for households earning less than 120% of the median family income in the area; and renting properties at affordable rents for households earning less than or equal to 80% of the median family income in the region. “

This move will also be prioritized to allow investors outside of large corporations – including nonprofits and local governments – to participate in the process, according to Lopa P. Kolluri, FHA’s principal deputy assistant secretary.

“This sale will provide greater opportunities for nonprofits and local governments to purchase properties that can then be made available for affordable home ownership, and will help revitalize the neighborhood,” she said in the HUD announcement.

To encourage more nonprofits and local governments to participate in this sale, as well as planned future sales, HUD announced that it will host a virtual training conference for such organizations on September 29th.

“The Expanded Opportunities for Participation conference will include presentations on the bond sale process, technical considerations, and an overview of the mortgage letters and processes for sale on November 10, 2021,” HUD stated in its announcement.

The HUD has completed the exchange of information by additionally indicating the sources of the notes in question.

“The HUD Assets Sales Office is part of the Finance and Budget Bureau in the HUD Housing Bureau,” the announcement said. “All mortgage letters slated for sale by November 10, 2021 pertain to vacant and abandoned properties backed by home equity conversion mortgages assigned to HUD after the death of the borrower and any non-borrowing spouse, if the The time has come for the heirs to report has expired. “

For more information on the upcoming sale, see HUD’s asset sale information page Lo.