National Consumer Law Center Advocates Say Homeowners Need More Protections
(WASHINGTON) Yesterday, the U.S. Department of Housing and Urban Development (HUD) announced changes to the Distressed Asset Stability Program (DASP), which sells defaulted Federal Housing Administration (FHA) mortgage loans to for-profit buyers at a discount.
When loans are sold in the DASP program, the homeowners lose important government protections that help ward off foreclosure. HUD’s announcement seeks to fill this gap with a requirement for servicers to consider reducing loan principal to make loans more affordable. “We agree that principal reductions are sorely needed, but HUD’s approach is to leave the decision solely to the discretion of the loan buyers,” said Geoff Walsh, attorney at the National Consumer Law Center (NCLC). “Note sales should include publicly available, enforceable standards to regulate what these buyers must do. Homeowners who are not offered principal reduction should be notified they were found ineligible and should be provided with supporting documentation.”