NEWARK, NJ – April 24, 2015 – (RealEstateRama) — U.S. Senator Bob Menendez commended actions announced today by the Department of Housing and Urban Development’s Federal Housing Administration (FHA) to strengthen the Distressed Asset Stabilization Program (DASP) in order to help struggling homeowners avoid foreclosure and stay in their homes, and assist communities suffering with high concentrations of foreclosures and distressed mortgages. New Jersey remains at the top of the nation in terms of homes in foreclosure, and the changes come in response to feedback from Senators Menendez and Booker and other stakeholders.
“Our economy is recovering, but for the hardest hit homeowners and communities, the foreclosure crisis still continues,” said Sen. Menendez. “FHA’s program has tremendous potential to help more homeowners keep their homes, and help struggling communities break negative cycles of foreclosure, abandonment, and disinvestment. I commend HUD for the actions taken today, which represent important steps to help meet these goals.”
Earlier this month, Sens. Menendez and Booker sent a letter to Secretary Castro with recommendations for strengthening DASP. HUD has included a number of these recommendations in the improvements announced today, including:
- Stronger standards for loan modifications, foreclosure alternatives, and disposition of foreclosed properties.
- Expanding access for nonprofit and community-focused organizations.
- Stronger reporting requirements.
Menendez chaired a hearing in December of the Senate Subcommittee on Housing, Transportation, and Community Development that examined continuing challenges in the housing market and recovery. At the hearing, Wayne Meyer of New Jersey Community Capital (NJCC), a community development financial institution, testified about how organizations such as NJCC have used DASP to help New Jersey homeowners and communities. Through DASP, FHA sells pools of seriously distressed mortgages to nonprofit and for-profit investors. The program allows FHA to increase returns on the loans for taxpayers, while also improving the ability of homeowners with distressed mortgages to avoid foreclosure and stay in their homes and improving outcomes for communities.
Through purchases of distressed loans, investors like New Jersey Community Capital have been successful in making modifications to reduce loan balances and lower monthly payments for homeowners behind on their mortgages, allowing them to avoid foreclosure and stay in their homes, or where modifications are not possible, turn the foreclosed home into affordable rental housing or create other ownership opportunities.
More broadly, the hearing discussed DASP as an important tool for helping homeowners and communities that were hit hardest by the crisis and continue to struggle. As part of the discussion, witnesses at the hearing recommended many of the improvements of the type HUD is announcing. Some of the recommendations included strong standards on reporting, loan modifications, foreclosure avoidance, and disposition of foreclosed properties, as well as greater participation by nonprofit and community-focused organizations.