The U.S. Department of Housing and Urban Development is now accepting applications from investors interested in buying pools of severely distressed mortgages formerly insured by the Federal Housing Administration, HUD announced today.

To help avoid unnecessary foreclosures and further stabilize communities, HUD is increasing its original goal of selling 5,000 loans per quarter to approximately 9,000 this quarter.

“Providing the opportunity for borrowers to potentially stay in their home under a new sustainable mortgage or other meaningful help not only benefits that homeowner but reduces the costs to FHA and ultimately benefits the entire community,” Donovan said.

If a borrower is at least six months delinquent on their mortgage, the program allows an FHA-approved loan servicer to file a claim for FHA insurance benefits and assign the loan to FHA if the servicer has exhausted all steps in the FHA loss mitigation program and initiated foreclosure proceedings, HUD said. FHA then pools such loans for resale and sells them at auction generally at a price below the outstanding principal balance. FHA removes FHA insurance before transferring the loan to the purchasing investor.

“This program creates the opportunity for everyone — the homeowner, the new mortgage holder, FHA, and the community — to walk away a winner,” said Acting FHA Commissioner Carol Galante in a statement. “FHA not only avoids the costs associated with a long foreclosure process, but also the high costs of maintaining and selling vacant properties in already distressed markets.”