RELEASE: On Second Anniversary of FHA’s Distressed Asset Stabilization Program, New CAP Report Offers Recommendations for Strengthening Program to Better Help Neighborhoods and Homeowners and Save Taxpayer Dollars

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Contact: Allison Preiss

With Release of DASP Analysis, CAP Launches Asset Sale Interactive Database

Washington, D.C. — Two years after the Federal Housing Administration, or FHA, launched the Distressed Asset Stabilization Program, or DASP, a new Center for American Progress report examines the results of the program so far and provides recommendations for how the program could better serve homeowners and neighborhoods while also protecting taxpayers. CAP’s analysis relies both on a new report on DASP outcomes released by FHA last week and on independent research that CAP conducted with DASP buyers and stakeholders.

Based on these data, CAP finds that while the program appears to have strengthened FHA’s insurance fund and prevented some foreclosures, the program’s special neighborhood stabilization outcome, or NSO, auctions have been significantly more advantageous to homeowners than national auctions.

Loans sold through NSO auctions were far likelier to reperform than those sold through the national auctions—23.5 percent of resolved NSO loans are reperforming, compared to only 8 percent of resolved national auction loans. Despite better outcomes for homeowners, and comparable bids, only 20 percent of DASP loans are sold through NSO auctions. Moreover, nonprofits committed to neighborhood stabilization won only approximately 2 percent of all loans sold through the DASP program. The overwhelming majority of loans sold through the DASP program do not need to meet any loss mitigation or community stabilization requirements.

The report also notes concerns about how loans are referred to DASP and about the extent and distribution of program reporting. One-third of loans purchased through the national program have already been resold to other investors who have no loss-mitigation requirements or reporting requirements.

Finally, the report recommends how FHA should improve the program going forward. In particular, it should:

  • Strengthen DASP post-sale requirements to improve outcomes for homeowners and neighborhoods.
  • Expand the number of loans included in NSO auctions, which aim to assist areas hit particularly hard by the mortgage crisis and appear to have better homeowner outcomes than the national auctions.
  • Encourage more participation from nonprofits working to stabilize communities.
  • Ensure that mortgage services do not refer loans to DASP prematurely to avoid fulfilling their loss-mitigation requirements under FHA’s rules.
  • Collect more data on program outcomes and demographics and share this information more regularly with the public.

Sarah Edelman, Policy Analyst on the Housing Finance and Policy team at CAP and the report’s principal author, said: “With FHA still insuring more than half a million seriously delinquent loans, program improvements that build on DASP’s strengths could have a significant positive impact on neighborhood stability. An improved DASP program could also serve as a model for Fannie Mae and Freddie Mac note sales going forward.”

Co-author and CAP Housing and Finance Policy team Director Julia Gordon added: “With strong bids in the NSO pools as well as the national pools, FHA is well positioned to strengthen the requirements of the program while still reducing its own losses.” Aashna Desai also contributed to the report.

In conjunction with the report, CAP is making available in an interactive database the DASP auction pool and buyer information that the U.S. Department of Housing and Urban Development has previously released in static form. Click here to see the database.

For more information on this topic, contact Allison Preiss at 202.481.6331 or

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