The U.S. Department of Housing and Urban Development (HUD) recently announced they will make significant changes to the FHA’s Distressed Asset Stabilization Program (DASP). DASP helps to sell mortgages in danger of foreclosure to qualified bidders and encourages loan servicers to work with borrowers to bring the loan out of default.
The changes to DASP will make it harder for servicers to foreclose on properties and will affect how delinquent loans are auctioned off. The new guidelines are intended to offer more flexibility to consumers trying to avoid the loss of their home. Here’s what you need to know if you are potentially facing a foreclosure.
1 Year Foreclosure Delay
Instead of waiting just 6 months, loan servicers holding distressed properties will now be required to delay foreclosure for a year.
Home Affordable Modification Programs
Servicers will also be required to evaluate borrowers for the Home Affordable Modification Program (HAMP) or a similar loss mitigation program.
Non-profits or Government Entities
HUD is making additional improvements to increase non-profit participation. Updates include giving non-profits a first look at vacant properties, allowing purchasers to re-sell notes to non-profits, and offering a non-profit only pool.
In a news release, Genger Charles, Acting General Deputy Assistant Secretary, Office of Housing said, “The improvements not only strengthen the program but help to ensure it continues to serve its intended purposes of supporting the MMI (Mutual Mortgage Insurance) Fund and offering borrowers a second chance at avoiding foreclosure.”