HUD to Sell Due and Payable Reverse Mortgage Loan Pools

The Department of Housing and Urban Development is marketing for sale multiple pools of reverse mortgage loans that were assigned to HUD and are currently being serviced by the department.

In a press release last week, the agency specified that it will offer multiple residential pools on April 11, and that those pools consist of around 650 notes with a loan balance of roughly $136 million.

All of the loans are secured by vacant properties where the last surviving borrower is now deceased — with no non-borrowing spouses.


Reverse mortgage loans can be reassigned to HUD when the loan balance reaches 98% of the maximum claim amount.

The agency has successfully sold similar loan pools in the past to specialized buyers.

Written by Elizabeth Ecker

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  • Is this the way that HUD plans to reduce its REO of homes where the homes served as HECM security? Since these loans are all assigned and are in default because there are no borrowers occupying the homes as their principal residence with no qualified non-borrowing spouses lurking in the picture, HUD essentially is saying that it does not want itself or its servicer to foreclose on these homes.

    It would seem the buyers are essentially residential home vultures who are looking to own the properties and flip them. Specialty buyers is just a nice name for vultures.

    • Hi George,

      Hud is selling non performing notes (where a due and payable clause can be triggered) instead of selling actual REO properties where the property has been foreclosed and title has transferred to the servicer. Buyers of HuD notes are different than just REO buyers since HUD note buyers are held to servicing requirements. I guess HUD either underestimated the number of assigments and thus the cost of liquidating such due and payable notes that were assigned to HUD or simply the department doesnt want to involved with the lengthy process of clearing title and executing foreclosures on these properties.

  • George,

    In a sense you are right, this is a way for HUD to reduce its REO’s in inventory!

    These homes will eventual be sold and we can assume be sold under market value. However, this is better than holding on to the inventory.

    Also, under this method, inventories shall move much faster through the system!

    John A. Smaldone

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