Real Estate Owned

Written By: Bonnie Wilt-Hild

Before I begin, I just want to say that I left my flying monkeys home this morning so for those of you that enjoy my occasional black rant, you will be disappointed. However I will say overall sarcasm is not out of the question because here of lately whenever a discussion takes place that includes the federal government, excluding HUD of course, that relates to the real estate market, well it’s just impossible to not be sarcastic, they make it too easy.

Need FHA Training? CLICK HERE:

Speaking along those lines, I read a press release yesterday involving FHFA, the U.S. Treasury and of course HUD (the only one of the three that should actually be involved in this) which stated that the feds were seeking input on the disposition of real estate owned properties including those owned by FNMA and FHLMC. According to the press release, the RFI’s (Request for information) objective is to help address current and future REO inventory as it wishes to explore alternatives for maximizing value to taxpayers and increase private investment in the housing market. Ok, so it is now 2011 and the Federal Housing Finance Agency wishes to address the disposition of Real Estate Owned. Would someone please tell me that it did not take them 4 years to realize that this was going to be an issue because I was pretty sure that it was going to cause a problem around the end of 2007. More interestingly, they want to address it now when there is a proposal floating around in the U.S. House of Representatives to change the formula with which loan limits are calculated, which if passed, could remove the floor that keeps FHA limits from dropping to unrealistically low levels further impeding that maximum mortgage an individual could obtain using FHA financing as a vehicle. If you ask me, they should be addressing that because to remove that floor would essentially remove the only game in the industry, which is FHA, as a financing option.

So after I gave it some thought, I decided I knew exactly how to respond to the RFI and address all of the criteria stated in the press release to assist them in meeting their objectives. First, don’t pass the current proposal to remove the floor on loan amounts. To do so is like sticking a knife into an industry that is still on life support. Further, this will eliminate any and all financing options for any single potential buyer to obtain financing. Next, lift the moratorium on the Investor 203k. HUD has been trying to implement the necessary changes since November, 2010 but cannot seem to get the cooperation necessary to get the program off the ground. This alone would bring a plethora of potential buyers who would not only begin to absorb those properties but also allow those REO assets to be used to support those markets with a strong demand for rental units, assist in neighborhood and home price stabilization, address property repair and rehabilitation needs and reduce the average loan loss severities to the Enterprises, all of which were listed as objectives in the press release. Additionally, I would like to say that it took me all of 4 minutes to rationalize that, not 4 years so it’s not as complicated as it sounds.
In closing I thought I would bring to light a small change in communication with FHA Outreach that is effective today, this being a change in the email address when communicating questions to FHA. The information is below. With that, have a great week and as always, happy underwriting.
Subject: Important Changes to FHA Communication Options. The Federal Housing Administration’s Single Family program area is announcing changes to our primary electronic mail address as well as the internet site of our FHA Frequently Asked Question (FAQ) site. In 2006, FHA created the FHA Resource Center in order to help ensure prompt, accurate, and consistent responses to all inquiries. The FHA Resource Center acts as the first line of response for the majority of industry and public inquiries. FHA believes that the FHA Resource Center allows members of the industry and the general public to quickly obtain the information they need while improving the consistency and accuracy of the information FHA provides. The email address and FAQ site are integral parts of the FHA Resource Center and FHA is anxious to spread the coming changes to our internal and external partners.

Need FHA Training? CLICK HERE:

Due to an internal system change we are now able to provide a more appropriate and easier to remember email address and FAQ site address for our clients. The address changes outlined below go into effect on Monday, August 15. They will not be operational prior to that date and should not be utilized prior to August 15. Both the existing FAQ site and email address will provide referral notifications regarding the new addresses, but clients should begin utilizing these new addresses exclusively on August 15.

The new address information is:
Primary email address will change from
Site address for the FHA FAQ site will change to

Please note that there is no change to the primary Resource Center telephone number which remains 1-800-CALLFHA (225-5342)

About The Author

Bonnie Wilt-Hild - As an NAMP® staff writer, Bonnie currently serves as a senior instructor for FHA Online University ( as well maintains a full-time mortgage underwriting position as the Senior FHA DE Underwriter for a major lending institution. With over 25+ years of senior-level FHA/VA Government underwriting experience, Bonnie is considered the "Queen of FHA Loans". If you're interested in becoming a writer for NAMP®, please email us at:

Opinion-Editorial (Op-Ed) Disclaimer For NAMP® Library Articles: The views and opinions expressed in the NAMP® Library articles are those of the authors and do not necessarily reflect any official NAMP® policy or position. Examples of analysis performed within this article are only examples. They should not be utilized in real-world application as they are based only on very limited and dated open source information. Assumptions made within the analysis are not reflective of the position of NAMP®. Nothing contained in this article should be considered legal advice.