A tiny loan sale by the Department of Housing and Urban Development in June was a harbinger of bigger things to come, the department said last week.
HUD auctioned 14,990 single family mortgages and 10 land development loans on June 22. The sale of the loans, which carried an unpaid principal balance of $189 million, "was meant to test the receptiveness of the market to the sale of HUD's burgeoning mortgage loan inventory," the department said in a statement.
At the June auction, 10 firms successfully bid to purchase the loans, confirming HUD's belief that HUD-held loans "are attractive to investors," the department said.
The auction sets the stage for sales of up to $8 billion of nonperforming multifamily mortgages that HUD plans to begin early next year, the department said.
Earlier this year, Congress passed legislation removing legal roadblocks to the sale of nonperforming multifamily loans and foreclosed properties held by the department. HUD said inlast week's statement that it has proposed policies to guide the sale of multifamily properties, the final version of which are expected to be published next month.