Vigorous enforcement of HUD’s loss mitigation rules would preserve homeownership and stabilize communities better than essentially unrestricted sales of the loans, often to financial speculators. To date, however, HUD has not held its major servicers accountable for their non-compliance with HUD’s own servicing rules.
The note sale program should continue only if it can be transformed to benefit homeowners, communities, and the Fund while preventing FHA servicers from escaping their obligations under FHA’s rules and avoiding accountability under state law for their conduct.