HUD Archives: News Releases

HUD No. 08-101
(202) 708-0685
For Release
July 9, 2008


DETROIT- U.S. Housing and Urban Development Secretary Steve Preston today announced an innovative pilot initiative that will allow HUD's Federal Housing Administration (FHA) to provide new foreclosure prevention assistance to homeowners starting with the Detroit area. HUD is creating a means for lenders to assign their non-performing FHA-insured mortgages to HUD and a joint venture partner that specializes in keeping families nearing foreclosure in their homes. This aggressive measure is also designed to reduce the number of additional properties that are becoming vacant.

In a speech to the Detroit Economic Club, Preston explained that these mortgages are secured by properties owned and occupied by hardworking families struggling to make their mortgage payments. "The primary objective of this partnership is to keep as many Michigan families as possible in their homes," said Preston. "It will not only help individual homeowners, it will reduce the flow of vacant properties weighing down property values and creating blight in neighborhoods."

This is an option for FHA lenders when all traditional loss mitigation has been exhausted and foreclosure would normally be the next step. The program allows FHA lenders to submit an FHA insurance claim when borrowers are in default (rather than waiting for foreclosure) and then assign the mortgage rather than to convey the empty property to HUD. HUD then transfers the assigned mortgage loans to a joint venture partner. HUD's joint venture partner is responsible for servicing the loan while providing the borrower with alternatives designed to avoid foreclosure, such as loan restructuring.

This action by HUD follows other recently announced initiatives aimed at helping to ease the housing crisis:

FHASecure Expansion

  • On July 14, HUD will implement the expansion of it very successful FHASecure mortgage refinance program, allowing FHA to help more homeowners who are struggling to keep up with their high-cost subprime adjustable rate mortgages.

  • Modifications to FHASecure will help homeowners who can no longer afford their mortgages and missed up to three monthly mortgage payments over the past 12 months. As an alternative to foreclosure, eligible borrowers can refinance with FHA and lenders can voluntarily write down the outstanding subprime mortgage principal balances.

  • FHASecure has already provided new, more affordable mortgages to more than 260,000 homeowners since September 2007.

90 Day Anti-Flipping Rule Waived for One Year

  • In an effort to stabilize declining home values in hard-hit neighborhoods, FHA has temporarily extended government-backed mortgage insurance to foreclosed properties marketed and sold by property disposition firms on behalf of lenders. The properties, which must purchased by owner-occupants, will no longer be subject to the customary 90-day waiting period, allowing the immediate sale of vacant foreclosed properties.

Housing Counseling

  • In February 2008, President Bush requested $65 million for housing counseling in his Fiscal Year 2009 budget request. The Administration has increased funding for HUD's 2,300 approved housing counseling agencies by 150 percent since 2001.

  • Fifty million dollars was approved for counselors in Fiscal Year 2008. Another $180 million went to the non-profit Neighbor Works this year to help them counsel struggling homeowners on how to prevent foreclosures.


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

Content Archived: May 14, 2010