Mortgages taken over by the Federal Housing Administration (FHA) are largely up for grabs, and a large number of hedge fund companies have pounced on the chance to snatch them up. According to the New York Times, over 100,000 delinquent mortgages have been sold off to private equity or hedge fund corporations. Frequently, the FHA fails to disclose to residents that their mortgages have been acquired by these private companies. This often leads to issues when the hedge fund that owns the delinquent mortgage attempts to restructure the loan via either a foreclosure or loan modification, with the intention of making quick money. These situations are sometimes handled without a shred of compassion.
Not all of these hedge fund companies are out to displace residents and make fast cash, though there have been numerous reports against these private companies. Even in situations where the resident filled out the necessary paperwork to evade foreclosure, the hedge fund often still pursued action.
The Department of Housing and Urban Development intervenes
In an effort to combat these unethical actions, the Department of Housing and Urban Development (HUD) has levied additional regulations against these morally ambiguous corporations. For instance, private buyers will now have to wait 12 months before they can legally foreclose on a home, which is twice the amount of time that was previously mandated by law. Additionally, HUD is making its best attempt to refrain from selling delinquent mortgages to strictly for-profit enterprises. The department will rather look to sell these mortgages to nonprofit companies who have a greater chance of working with the resident, allowing them to potentially stay in their home.
Hedge funds have certainly found a new way to make quick money, however, one which often mandates that their ethics be left at the door. If you find yourself in one of these unfortunate situations, Graham Legal would love to help. We invite you to set up an initial consultation with a Miami foreclosure attorney today and let us show you the path to a better financial future.