Greenland: The sheer size of this
portfolio, as well as its structure,
make it stand out.

WASHINGTON, DC-As it said it would last month, the US Department of Housing and Urban Development has widened its defaulted mortgage pool program and will begin accepting bids from investors interested in acquiring pools of defaulted mortgages. DebtX, on behalf of SEBA Professional Services, is taking an eye-popping $1.7 billion portfolio of non-performing residential loans to market under the program, called the Distressed Asset Stabilization program.

The HUD portfolio, SFLS 2012-3, consists of loans collateralized by homes in Chicago, Newark, Phoenix and Tampa. This offering has a number of unique attributes to it, DebtX CEO Kingsley Greenland tells, starting with its sheer size. In addition, it is broadly marketed to qualified investors—meaning it is open to the public, unlike the GSEs’ securitized pools. “Also, the structure is very novel,” Greenland says.

About $700 million of the assets will have restrictions to them, in that the buyers of the assets must work to stabilize the properties with the current residents–and not sell them off as investments. “There will be caps on how much of the assets can be foreclosed on and so on,” Greenland says. “It is a very complicated structure in fact but the goal is straightforward: HUD wants to see neighborhood stabilization.”

There will be 13 pools, with sub-pools available. Also, a small number of the pools will be targeted to nonprofits. The pools will range in size between $30 million to $285 million, consisting of 9,442 loans. “By any measure this is a big deal,” Greenland says. Sealed bids will be accepted at from 11 a.m. to 1 p.m. Eastern on Wednesday, Sept. 12, 2012. Due diligence materials are now available at