Evaluation of 601 Accelerated Claims Disposition Demonstration

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The Accelerated Claims Disposition (ACD) Demonstration is designed to provide an alternative disposition strategy for delinquent Federal Housing Administration (FHA) loans. Enacted as Section 601 of the Appropriations Act for Fiscal Year 1999, ACD gives the Department of Housing and Urban Development (HUD) the authority to experiment with a more flexible method of paying claims for FHA-insured loans and disposing of foreclosed, single-family properties. The legislation permits the Federal Housing Administration (FHA) to accelerate the claim on delinquent mortgage notes and transfer them to a public/private joint venture (JV) for disposition. FHA sells the notes to the JV at a discounted price determined by competitive bid. The JV then manages the restructuring of notes for securitization and sale or the foreclosure and property sale of non-performing loans. FHA retains an equity interest in the partnership undertaking asset disposition.

 

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