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I N D U S T R Y I N S I G H T / B R I A N H O N E A A N D K E N D A L L B A E R
HUD's first non-
performing loan (NPL) sales
program has been the focus
of much controversy since it
began in 2010. e program
later renamed the Distressed
Asset Stabilization Program
(DASP) in 2012, has, to
date, sold approximately
105,000 loans and its single-
family loan sales programs
totaled about $18 billion in
unpaid principal balance (UPB).
An analyzation of 70,000 loans sold in six
DASP auctions from April 2012 to June 2014
found that 63 percent of those loans were located
in ZIP codes with higher-than-average levels
of negative equity; 69 percent of them were
located in ZIP codes with higher-than-average
unemployment rates; and 84 percent of them
were located in ZIP codes with a higher-than-
average concentration of minorities.
Conversely, in a report from e Center for
American Progress (CAP) it was determined
that most notes analyzed were located in areas
where job gains were increasing and the share of
underwater homeowners was declining.
"Notes sold through DASP tend to be
located in communities where large shares
of homeowners are 'underwater,' or owe
more on their home than it's worth; where
unemployment remains high; and with large
shares of communities of color, who lost a
disproportionate share of wealth during the
housing crisis," said Sarah Edelman, Director
of Housing Policy at CAP and co-author of the
report."
CAP's report made recommendations for
improvements that FHA should make and
that policymakers should support in order to
ensure that DASP is beneficial for both the
homeowners and the communities in which the
distressed properties are located.
"Assumptions about note purchasers'
economic incentives are not enough to ensure
that these companies do not further destabilize
communities on the road to recovery," Edleman
said. "DASP needs stronger standards that
SCRUTINIZING STABILITY
Are Changes to HUD's Distressed Sales
Program Motivated by Policy or Politics?
