The Federal Housing Administration, struggling to manage a growing glut of delinquent home mortgages, plans to ramp up sales of the loans to investors, a move that could stave off foreclosure for thousands of homeowners, the Wall Street Journal reported today. The government agency, which is expected to announce the bulk sale program today, has more than 700,000 loans in default, amounting to more than 9 percent of the $1 trillion in loans it insures. Mortgage-finance giants Fannie Mae and Freddie Mac as well as banks have shied away from bulk mortgage sales despite heavy interest from investors because they would have to sell the loans at such deep discounts. For now, the FHA says that it plans to sell up to 5,000 defaulted mortgages every quarter. In a small pilot sale in April, the agency sold 279 loans to buyers that paid around $19 million, representing around a third of the outstanding loan balances. It sold about 2,200 loans last year through the program.
