HUD home is a property that has been lost by a previous owner in foreclosure or a property that an owner has given back to the lender with a deed in lieu of foreclosure. Property owners facing financial difficulties are sometimes unable to keep up with mortgage payments. In the case of HUD homes, the property owner is a person who obtained an FHA mortgage to purchase or refinance the property as a principal residence.
A lending institution, such as a mortgage company, bank, savings and loan association, funds the mortgage loan; the Federal Housing Administration (FHA), an agency that is part of the U.S. Department of Housing and Urban Development (HUD), insures the mortgage. The mortgage insurance protects the lender from financial loss in the event the borrower defaults. When an FHA homeowner defaults on FHA loan and the bank takes the house back in foreclosure, the lender has two choices about the disposition of the property. The lender may decide that there is sufficient equity in the house to turn a profit; it may keep the property and sell it as part of its Real Estate Owned (REO) inventory. Or, the lender may "cash in" on its FHA insurance policy and turn the property over to HUD. HUD adds the property to its pool of properties in the HUD Homes For Sale Program.
HUD's regional Marketing and Management (M&M) Contractor prepares the property for sale and markets the home according to HUD guidelines. HUD is presently the single largest owner of single-family homes in the country.
Preparing the HUD Home for Sale
The M&M Contractor performs various tasks prior to placing the home on the market:
- Ascertain that the title to the property is in HUD's name.
- Clean the home and remove debris.
- Hire a pest control company to inspect for insects and rodents and order extermination if necessary.
- Order an FHA appraisal.
- Perform a damage assessment of the property.
- Secure the property and be responsible for overall maintenance including minimum lawn care services.
Marketing the HUD Home
Responsibilities of the M&M Contractor include:
- Disseminate information about the property to a Listing Agency that will place information about the property in the local multiple listing service database.
- Advertise the home on the M&M Contractor's web site when it becomes available for inspection and open for bids.
- Take bids on the property.
- Select and award a winning bidder.
- Review original sales contract for accuracy.
- Sign sales contract on behalf of HUD.
- Authorize utility activation for inspections and appraisers.
- Review and approve extensions to the sales contract.
- Approve the HUD 1 settlement sheet.
New properties are listed on the M&M Contractor web sites in most areas of the country on Friday mornings. The opening screen page featuring a list of cities that have HUD Homes for sale appears below.
Who can buy a HUD Home?
Any qualified buyer who is pre-qualified by a lender or who has sufficient cash to cover the transaction costs can buy a HUD Home.
Buyers do not have to be first-time homebuyers to buy HUD homes.
Buyers do not have to fall into low-income categories.
HUD homes range in price, but most are affordable for low- and moderate-income Americans.
HUD homes buyers fall into two distinct categories:
- Owner Occupant buyers and
- Investor buyers.
One of the primary objectives of the program is to provide home ownership opportunities to owner occupant purchasers.
Therefore, owner occupant purchasers have priority over investor buyers in the first ten days that a property is on the market. Investors may not bid on a HUD property during the first 10-day listing period.
An owner occupant purchaser is defined by HUD as a buyer who will live in the property as a primary residence for at least 12 months. There is an Owner Occupant Certification Form that the buyer must sign as part of the bid package.
U.S. Dept of Housing and Urban Development (HUD) employees and relatives of HUD employees are eligible to buy HUD Homes, but must receive written approval from the Director of HUD's Office of Single Family Asset Management in order to purchase a HUD-owned single-family property
To view HUD Homes please go to http://hudhomestore.com
Also, if you are intrested in buyinig a HUD Home please visit our client page for more information about the services we offer our clients. We love HUD buyers and are happy to assist you in a HUD Home Purchase.