HUD Archives: News Releases

HUD No. 03-122
(202) 708-0685

For Release
October 30, 2003

Initiative to Save Department $61 Million

WASHINGTON - Federal Housing Commissioner John C. Weicher today announced the results of two recent sales in HUD's Accelerated Claims Disposition (ACD) initiative. The sales are expected to save the Department $61 million. The ACD initiative is designed to produce savings to HUD by accelerating the claims process on defaulted loans insured by the Federal Housing Administration (FHA).

"This is a very good opportunity for the Department to enter into public/private partnerships that will benefit HUD financially and in many cases can enable families to remain in their homes," said Commissioner Weicher. "This Demonstration enables HUD to resolve defaulted assets by aligning private sector interests with the FHA, and at the same time reduce HUD's participation in the Real Estate Owned business."

In a September 25 sale of FHA-insured Single-family loans, the winning bidder was Lehman Brothers. It was awarded a 70% equity share in a joint venture partnership with HUD to acquire, service and dispose of 4,550 single-family loans. The unpaid principal balance on this pool of loans is approximately $439 million. HUD retains 30 percent of the equity share, with projected savings to the government of $33 million. Delinquent single-family borrowers with mortgages included in these sales have a greater range of options to remain in their homes.

In a September 16 sale of FHA-insured multifamily and healthcare facility mortgages, the winning bidders were PAMI MidAtlantic LLC (Listed as Lehman Brothers) and Capital Crossing Bank. They were awarded 39 mortgage loans with an unpaid principal balance of $153 million, with estimated savings to the Department of $28 million. The sale consisted of mortgage loans secured by multifamily apartment properties, assisted living facilities and nursing home facilities.

The ACD program was authorized by Section 601 of the FY 1999 HUD Appropriations Act, which provided HUD with greater flexibility to choose the most cost-effective methods of paying insurance claims and disposing of acquired notes and properties. The total budget savings from mortgage loan sales held since 1994 now surpasses $2.64 billion.

For more information regarding the loan sales program please visit the Department's Loan Asset Sales website.

HUD is the nation's housing agency committed to increasing homeownership, particularly among minorities, creating affordable housing opportunities for low-income Americans, supporting the homeless, elderly, people with disabilities and people living with AIDS. The Department also promotes economic and community development as well as enforces the nation's fair housing laws. More information about HUD and its programs is available on the Internet.


Content Archived: April 22, 2010