The White House late last week touted the recently-completed sales of former reverse mortgage properties as a key component in its pledge to bolster the supply of single-family housing across the country, including defaulted assets under the purview of the Federal Housing Administration (FHA).
“The Administration has taken steps to direct a greater share of the supply of FHA, Fannie Mae, and Freddie Mac defaulted asset dispositions to owner-occupants and mission-driven entities instead of large investors,” the statement said. “In two recent sales of HUD Home Equity Conversion Mortgage (HECM) notes secured by vacant properties, a total of 1,393 notes were awarded with 61% of the notes awarded to non-profit or non-profit joint venture bidders.”
In the sale that took place on July 27, all purchasers (including for-profit entities) were required after foreclosure to market the purchased property for sale and offer a 30-day priority purchase period to owner occupant, government and nonprofit buyers, the statement said.
“As a result of these efforts, more single-family homes are expected to be restored to viable use as affordable homeownership and rental properties,” the White House said.
On November 10, 2021, HUD held a sale offering multiple residential mortgage pools consisting of approximately 1,700 notes and a loan balance of approximately $417 million. Another such sale was held in June 2022, which saw a New Jersey-based community development organization buy up nearly 200 former HECM properties, marking the first transaction of its kind to be completed at this scale with collaborating nonprofits.
In July, a senior HUD official explained for RMD how these plans played into the broader supply goals of the Biden-Harris HUD.
“This administration has really pivoted to emphasize the importance of making sure that on any property that HUD is insuring that there is an opportunity for that property, whatever disposition path it goes through, to have a first-look period,” a senior official said at the time. “[During that period,] homeowners, nonprofits or mission-focused buyers who acquire properties to rehab and then resell to an owner occupant have the first opportunity [to acquire] these properties prior to investor purchases. Whether those are small, medium or large investors, we want that homeownership opportunity to come first.”
The administration also plans to take a closer look in the coming months at the growing trend of institutional investor purchases of housing supply, and HUD’s Office of Policy Development and Research will feature the topic of “Institutional Investors in the Housing Market” in an upcoming quarterly publication.
Read the announcement by the White House.