The US Department of Housing and Urban Development (HUD) announced Thursday that it will hold a competitive bid to sell vacant tickets held by HUD on November 10, consisting entirely of properties secured by home equity conversion mortgages (HECM ) in which the borrower is deceased and is not survived by a non-borrowing spouse (NBS).
“On November 10, 2021, HUD will be offering multiple residential mortgage pools consisting of approximately 1,700 notes and a loan balance of approximately $ 417 million,” HUD describes in the event listing on its website. . “The sale will consist of loans held by the secretary due and payable. Loans are first liens secured by vacant residential properties of 1 to 4 units where the last surviving borrower has died. This sale will include increased auction opportunities for nonprofit buyers and state and local governments. “
Properties all secured by HECMs, move aligns with Biden administration’s housing policy intentions
The announcement of the sale gives a somewhat more precise figure of the amount of the tickets that will be made available, specifying that they are entirely made up of goods from reverse mortgages in which the borrower is now deceased.
“The sale will include approximately 1,730 reverse mortgage notes secured by properties where the borrower has died and has not survived a non-borrowing spouse,” HUD said in its announcement. “As per the Biden-Harris administration’s announcement on September 1, 2021 that more HUD-owned properties should be returned to a future owner, HUD will offer up to 50% of the ratings in multiple loan pools for offers first by those eligible. non-profit organizations and state and local government units. Previous sales have prioritized about 10% of mortgage notes for this purpose. “
The September 1 announcement made by the White House – not to mention properties secured specifically by reverse mortgages – described the Biden administration’s intention to enter the housing investment industry using the authority and the government’s housing authority considerable stocks to try to affect availability. housing supply and its interactions with high levels of demand.
“The long-standing and large gap between supply and demand for affordable housing for renters and homeowners makes it harder for families to buy their first home and increases the cost of rent,” the White House said. September 1. housing costs also crowd out other investments families can and should make to improve their lives, such as investments in education.
With supply constraints intensifying across the country over the summer, large investors have stepped up their residential real estate purchases, including in urban and suburban areas. According to Redfin data cited by the White House, one in six homes bought in the second quarter of 2021 was acquired by investors, with some reports indicating that the figure is rising to one in four in some markets.
“Among investor purchases, typically over 35% of purchases are made by investors who own more than ten properties,” the White House said. “The purchases of single-family homes by large investors and their conversion to rental properties accelerate neighborhoods’ transition from ownership to rental and drive up the prices of lower-cost homes, making it harder for aspiring first-time buyers and buyers. first generation, among others. , to buy a house.
According to the White House, these transitions are also unlikely to provide significant additions to housing supply in lower-cost parts of the rental market, due to the fact that investors typically charge more for rent in order to recoup their rental costs. purchase higher, according to the White House.
What does this decision have to do with the White House agenda
In Thursday’s announcement, HUD is very blunt in saying that this sale is specifically aimed at expanding the availability of affordable housing.
“The sale aims to increase the supply of affordable housing, expand opportunities for home ownership and rental housing, and revitalize communities through the provision of these tickets,” the White House said. “[This includes] sell properties to low- and moderate-income homebuyers at an affordable price for households earning less than 120% of the region’s median family income; and renting properties at affordable rents for households earning less than or equal to 80% of the region’s median family income. “
The move will also be a priority to allow investors other than large corporations – including nonprofits and local governments – to participate in the process, according to FHA Deputy Senior Assistant Secretary for Housing Lopa P. Kolluri. .
“This sale provides greater opportunities for nonprofits and local governments to purchase properties that can then be made available for affordable homeownership and to support neighborhood revitalization.” , she said in the HUD announcement.
In an effort to encourage more nonprofits and local governments to participate in this sale as well as planned future sales, HUD has announced that it is hosting a virtual training conference for these organizations located on September 29. .
“The conference, ‘Expanded Opportunities to Participate’, will include presentations on the ticket sales process, technical considerations and an overview of tickets and mortgage processes for the November 10, 2021 sale,” HUD detailed in its announcement.
HUD concluded the information sharing by further specifying the sources of the notes in question.
“The HUD asset sales office is part of the finance and budget office of the HUD housing office,” the announcement said. “All mortgage notes for sale through November 10, 2021 are for vacant and abandoned properties secured by home equity conversion mortgages assigned to HUD following the death of the borrower and any non-borrowing spouse when the time has come for the heirs to come forward. elapsed. “
Find more information about the upcoming sale on HUD’s Asset Loan Sales Information page.