Councilmember Lisa Herbold today applauded recently announced improvements to the U.S. Department of Housing and Urban Development’s (HUD) delinquent mortgage sales program. The changes include:
- Making principal reduction the first strategy in modification processes
- Increased non-profit participation
- Far greater provisions for transparency in the sale process
- A commitment to work with local governments and non-profits on targeted sales
Councilmember Lisa Herbold (District 1, West Seattle & South Park) said, “Helping homeowners with principal reduction on their mortgages, and ensuring property-disposition plans are meeting affordable housing needs of the community is necessary to combating the affordable housing crisis across the nation.”
Councilmember Herbold added, “In September of 2015, I traveled to Washington, D.C. to join others in meeting with top officials at HUD about this issue. I responded to the February call to action by writing on op-ed in the Seattle Times on “Wall Street’s Impact on Seattle’s Housing Affordability.” Councilmembers then sent a letter that I authored to HUD, Fannie Mae, Freddie Mac, and Federal Housing Finance Agency asking Fannie Mae and Freddie Mac help delinquent homeowners receive mortgage principal reduction and stop selling mortgages to Wall Street at a discount.”
These reforms come on the heels of an aggressive community pressure campaign, led by local elected officials affiliated with Local Progress, a national network of progressive elected leaders, and community groups affiliated with the Center for Popular Democracy. Last summer, Local Progress members led a successful effort to get a Resolution passed at the June meeting of the U.S. Conference of Mayors, calling on HUD to prioritize selling these troubled mortgages to mission-driven purchasers, not Wall Street speculators.
With public events, reports and lobbying, Local Progress sought to spotlight a taxpayer funded program that has benefited Wall Street at the expense of communities. HUD’s “Distressed Asset Sales Program” (DASP) has been conducting bulk auctions of delinquent mortgages to the highest bidder, which has meant 98% of these troubled mortgages have been sold to Wall Street speculators. Wall Street speculator Blackstone has recently become the largest single family landlord in the country.
Local elected leaders and stakeholders now plan to make sure that HUD sells delinquent mortgage pools to mission-driven purchasers. On April 19, 2016, the Council received a response to its letter from FHFA director Mel Watt. Councilmember Herbold’s office is currently coordinating a meeting with Mel Watt to get more information about how Seattle can benefit from the changes HUD is making to the Mortgage Sale Program. Councilmember Herbold is currently seeking additional information about:
- The number of delinquent mortgages in Seattle;
- The number of mortgages that are 1+ years delinquent in Seattle; and
- The best process for successfully negotiating the sale of delinquent mortgages to one or more local non-profits.