The Department of Housing and Urban Development (HUD) manages and disposes of non-performing Federal Housing Administration (FHA) mortgage loans across single-family, multifamily, hospital, assisted living, and nursing home programs. As Program Financial Advisor to HUD’s Office of Asset Sales (OAS), Emax supports FHA in administering the asset sales program through the disposition of single-family, multifamily, and healthcare notes via competitive transactions, as well as direct sales to eligible public and nonprofit entities.

Since 1999, Emax has supported the planning and execution of loan sale programs, including multi-billion dollar single-family offerings with aggregate sales volumes totaling more than $40 billion in unpaid principal balance.

Challenge

FHA’s Mutual Mortgage Insurance (MMI) and General Insurance (GI) Funds back the FHA’s insurance commitments. Premiums flow into the funds, and when insured borrowers’ default, the funds ultimately bear the net cost of the claims. After a claim is paid, HUD receives the mortgage note, which is then added to large, diverse portfolios of non-performing loans across single-family, multifamily, and healthcare programs. Managing these defaulted loans is operationally complex and resource-intensive, and delays in dispositions can reduce recoveries to the insurance funds. HUD needed a scalable and data-driven approach to disposing of these loans that would maximize recoveries to the MMI and GI funds while supporting policy objectives and ensuring compliance with federal requirements.

OAS, which administers the asset sales program, required a financial advisor capable of integrating policy, financial, and market considerations to structure sales that could be executed efficiently and withstand public, congressional, and audit scrutiny.

Approach

As Program Financial Advisor, Emax provided strategic and technical support across the full lifecycle of FHA loan sales:

• Program Design & Strategy: Assessed market conditions, investor demand, and portfolio composition to recommend sale frequency, pool structures, and execution strategies tailored to each loan type.

• Data Analytics & Asset Segmentation: Conducted detailed performance analytics, stratification, and valuation modeling to support pool formation and determine optimal sale configurations to maximize recoveries.

• Documentation Reviews & Development: Supported the review and development of sales documentation program materials to ensure accuracy, compliance, and completeness.

• Transaction Execution: Assisted HUD and OAS throughout bid day operations, bid evaluation, award recommendations, and post-sale closings, including supporting HUD in managing and coordinating with the transaction specialist responsible for administering the auction process and bidder due diligence.

• Performance Review & Program Refinement: Analyzed post-sale recoveries, bidder behavior, and market feedback, and produced standardized post-sale analyses to allow for effective comparisons across sales, refine future sale strategies, and strengthen program performance over time.

Impact

Through Emax’s support, HUD executed an asset sale program that increased recoveries to the MMI and GI Funds while significantly reducing the administrative burden of managing defaulted loans. Competitive bidding and optimized pool structures helped FHA achieve strong pricing, which often outperformed alternative disposition options. Program refinements informed by post-sale analyses further strengthened recoveries by attracting additional capital and improving the sale strategy.

To date, loan sales supported by Emax have exceeded $40 billion in unpaid principal balance, helping FHA protect taxpayer resources, reduce credit risk, and accelerate the resolution of distressed assets across its insurance portfolio.