Carol Galante, the acting commissioner of the Federal Housing Administration, announced Oct. 4 that the agency would not follow the lead of Fannie Mae and would not be initiating a program where real estate-owned properties are turned into rentals, HousingWire reported.
Galante made the announcement at the HousingWire REperform conference in Dallas, where she said the REO-to-rental strategy was not in the best interest of FHA, servicers, borrowers or the neighborhoods affected by foreclosures.
HousingWire reported that the FHA currently has about 700,000 delinquent mortgages on its books.
Galante said her agency would sell the notes on these properties to investors, but one stipulation of sale is that the new owners cannot foreclose on borrowers for at least six months and must work on alternate solutions to keeping occupants in their homes.
Galante has not said when the FHA will start selling off the properties, although she noted that the agency planned to unload about 10,000 delinquent mortgages per quarter.
Buyers also cannot put more than 50 percent of the properties on the market as vacant foreclosures.