US housing agency's sales of bad loans of little help to hard-hit homeowners

Washington

THE US Housing and Urban Development Department has sold US$3.7 billion of soured loans since late 2012 to aid homeowners in communities hurt by foreclosures. So far, the government agency has mostly helped itself.

Borrowers resumed payments on fewer than 13 per cent of the mortgages as of February, according to a department report. Almost half the loans were still in "interim status" limbo because many borrowers, who've failed to make payments for an average of three years, have abandoned their properties.

HUD is struggling to balance the dual goals of curbing losses within a troubled-mortgage insurance fund and assisting homeowners. While HUD's bottom line has benefited from the debt sales, dominated by deep-pocketed firms backed by Oaktree Capital Management and Blackstone Group LP, there are…