A government program launched following last decade’s mortgage crisis to help struggling homeowners has mostly helped banks and hedge funds, and not Americans in danger of losing their houses.
Five years ago, the Department of Housing and Urban Development (HUD) launched a mortgage sales program called the Distressed Asset Stabilization Program (DASP) so it could unload teetering mortgages to the private sector.
DASP was supposed to not only help HUD improve its finances, but also assist homeowners facing the risk of foreclosure work out new terms with the banks or hedge funds buying the mortgages. But things haven’t worked out that way for the vast majority of homebuyers.
DASP has resulted in more than 98,000 mortgages—representing more than $16.7 billion in total debt—being sold to investors “at times as little as 41 percent of the mortgages’ collective value,” the Center for Public Integrity reported. The struggling Federal Housing Administration, which insures mortgages, became solvent as a result of the sales. However, only 16.9% of the mortgages sold between 2010 and 2014 avoided foreclosure.