The FHA’s “601 Note Sale” Program

National Mortgage News reports in part (see full article here) that

The Federal Housing Administration—which holds title to 700,000 seriously delinquent mortgages—plans to ramp up its single-family nonperforming loan sale efforts, according to housing commissioner Carol Galante.

FHA currently has a pilot “601 Note Sale” program in place, and recently completed the disposition of nonperforming loans in the Chicago area. Its goal is to sell notes in large pools before they enter foreclosure.

Investors generally purchase NPLs at significant discounts. This gives investors the flexibility to renegotiate the notes with borrowers so they can stay in their homes. [editor’s note: uh huh, sure]

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3 thoughts on “The FHA’s “601 Note Sale” Program

  1. Greetings,
    After missing my FHA mortgage payments on my double-wide located on a lot in Sun Valley, Nevada due to a job loss, I discovered that my house had been subject to fraud…namely, the seller did not own my house in violation of HUD’s requirement that the seller must be the owner of record. In fact the State of Nevada performed and investigation to determine who the owner was. Of course they failed to notify me of this and I did not find out until 2014–four years after I defaulted.
    Additionally, NRS 111.1175 stipulates that “…conveyances made to defraud prior or subsequent purchasers are void. Every conveyance of any estate, or interest in lands, or the rents and profits of lands, and every charge upon lands, or upon the rents and profits thereof, made and created with the intent to defraud prior or subsequent purchasers for a valuable consideration of the same lands, rents or profits, as against such purchasers, shall be void.”
    Bank of America was notified of this fact in a Notice of Rescission I sent them dated June 30, 2015. They waited 5 1/2 years to send me a notice of default and then sent a wet behind the ears attorney to represent them at mediation. This attorney didn’t bother to bring the required documentation and had no authority to negotiate, so no certificate of mediation was produced.
    I recently discovered that Bank of America collected the FHA insurance money through its Distressed Asset Sales Program. I believe that B of A realized that it could avoid the repercussions of being caught in a fraud by hanging me out to dry while biding their time until such time FHA would just hand it to them.
    This matter has been referred to HUD’s OIG, however I have no idea what the status is, or even if HUD is actually even bothering to investigate. It is my hope that you please work with HUD to get them to actually talk to homeowners before selling our houses off to Wall Street. I am sure they would get an ear full.

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  2. I have a client that got the run around from Bank of America, incorrect denial reasons, and now that the loan was part of this “601 Note Sale”, the new investor doesn’t participate in HAMP and they were denied for an “investor” modification. Greedy, greedy banks!!!!

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  3. What is stupid about this program is that it is solely to the benefit of the lender. I have a home owner who was granted an FHA Trial plan and paying in a timely manner when his loan was sold under the 601 program – now he has nothing. He has to start over again. How is this helping the home owner? Answer, it was not intended to protect those recently awarded or complying with their trial plans — those parties should have been excluded and allowed to complete their agreement. Instead it is another case of government saving the ass of Banks….agein!

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