WASHINGTON — The government has opened a program for investors to buy troubled mortgages in hard-hit areas and work out terms with homeowners in an effort to avoid foreclosures.
The government on Wednesday announced the planned sale of about 3,500 home loans insured by the Federal Housing Administration in the first four cities: Chicago; Newark, N.J.; Phoenix and Tampa, Fla. The cities were ravaged during the foreclosure crisis and have high numbers of homes with FHA-backed mortgages whose borrowers are delinquent and facing foreclosure.
The mortgages will be sold at market prices, generally below what the borrower owes on the loan. It’s the first phase of a program intended to sell about 9,000 mortgages in the third quarter, which is part of the Obama administration’s housing effort.