Is a HUD Home a Foreclosure Home?
HUD homes are Federal Housing Administration mortgages foreclosed by the U.S. Department of Housing and Urban Development. When a borrower defaults, HUD regains ownership of the home. A main objective of HUD is to increase homeownership by providing affordable housing options. In most cases, HUD homes are affordable and can be purchased by nearly anyone able to obtain the funds or financing.
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HUD Homes
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HUD becomes the owner of FHA-insured mortgage foreclosures. To recoup the loss, HUD sells the homes to the public. A HUD home is a single family or multi-family residential property. The price is often based on the balance remaining on the loan, although HUD can adjust the prices based on current market value. The condition of HUD homes is not guaranteed.
Buying a HUD Home
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Almost anyone with the funds available can buy a HUD home. If you are unable to pay cash, you must secure your own financing since it is not offered by HUD. During the priority period, the homes are first offered exclusively to homeowners who plan to make the home their primary residence before. Homes that do not sell are available to all buyers, even investors. Homes are sold as-is. The buyer is responsible for inspections and completing any necessary repairs or renovations.
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Locating HUD Homes
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Potential buyers can locate HUD homes through the Multiple Listing Service and through the HUD website. Follow state links of the HUD website to find local properties. All offers must be submitted by a real estate broker registered with HUD. A contract, earnest deposit and proof of funds or pre-approval letter from a lender are required with an offer. During the Offer Period, all sealed bids are accepted. The highest bid is selected. If HUD does not accept any offers, the bids are reviewed as received. HUD has real estate professionals working on their side. If HUD does not accept the offer, a counter-offer may be placed on the table. As a buyer, you have the option to acccept, decline or submit another counter-offer.
Special Programs
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Since HUD's objective is to offer affordable housing, homes not sold after six months on the market are sold to approved non-profit or government agencies for $1. The homes are used by the agencies to benefit neighborhoods and needy families. If the buyer is a teacher, law enforcement officer, emergency medical technician or firefighter, the Good Neighbor Next Door Program provides purchasing discounts and incentives.
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