Definition of a HUD Home

"HUD homes" is a term often heard in connection with government-foreclosed homes. Actually, this is a misnomer, as all these homes started out as homes that had loans backed by the Federal Housing Administration (FHA) .

History

HUD, the Department of Housing and Urban Development, is a department of the government responsible for a number of federal housing agencies and programs. One of these is the FHA.

Significance

When an FHA-insured loan goes into default, the home then falls under the jurisdiction of HUD, which has the responsibility of disposing of it.

Features

The originating lender is paid off by FHA, and the home goes back to the government as its owner, rather than going through normal foreclosure procedures. It is then administered by HUD for sale.

Process Of Sale

Just as financial institutions do, HUD has real estate professionals represent its interest in selling these homes. Sometimes it may be possible to assume the existing FHA loan, and at other times a new loan must be taken out by the buyers of a HUD property.

Effects

Either way, HUD properties are not hard to find. They may be listed by individual real estate companies or by multi-listing services, or you can contact your real estate agent or call your local HUD office.

References

• HUD--FHA