On April 24, 2015, the US Department of Housing and Urban Development (HUD) announced significant changes to its Distressed Asset Stabilization program. These changes were designed to increase non-profit purchases of distressed loans and require all investors in the program to take greater steps to prevent foreclosure.

Under the new rules, HUD will create pools of loans that can only be sold to non-profit organizations or units of local government. Additionally, all purchasers of distressed loans will be required to:

The new rules also feature greater reporting requirements for investors and stricter penalties for their noncompliance.

The Distressed Asset Stabilization program was started in 2012 to sell distressed loans backed by the Federal Housing Administration (FHA) to investors as a way for the FHA to minimize its losses. Investors had the potential to profit if borrowers resumed their mortgage payments. Before the new rules, purchasers of distressed mortgages participating in this program could foreclose on a home after six months, and while purchasers were encouraged to facilitate the use of loan modification programs, it was not required.

Many non-profit organizations have expressed support for these new changes and believe the new protections will keep more distressed borrowers in their homes. However, some investors say that investors already take steps to reduce the occurrence of foreclosures and the new changes only make the loans less valuable to purchasers.