is a HUD owned home?
A HUD home is a foreclosed home (or condo) that was financed using an FHA mortgage. When the home owner fails to pay the monthly mortgage payment, the bank forecloses on the homeowner. The FHA home loan program "insures" the bank against default. Consequently, HUD compensates the lender for the loss. Soon after HUD pays off the lender, HUD takes ownership of the foreclosed home (or condo) and will attempt to sell the property as quickly as possible, thus, HUD home. A HUD home can also be called an FHA foreclosure.
HUD/FHA works through approved real estate agents and brokers to market the foreclosed HUD homes. Call around until you find a HUD approved
Pennsylvania real estate agent. The real estate agent will explain how to located the HUD homes on the FHA web site.
HUD sells the foreclosed HUD homes through a bidding auction. A licensed real estate agent is required to submit your bid on the HUD home. HUD will compensate the real estate agent provided the Realtor's® commission request is contained in the purchase agreement. Many HUD certified Realtors® can also provide you a listing of bank foreclosures in their marketing areas.
As previously stated, to buy a HUD house, you must place your offer through a HUD approved real estate agent or broker. The bid is submitted on line.
The Department of Housing and Urban Development requires that you provide the Realtor® with a pre-approval letter from a bank or mortgage broker attesting to your creditworthiness. If you plan to purchase the home with cash (no loan), the agent is required to submit documentation that you are able to purchase the home as a cash buyer. HUD's sales contracts must be used to submit the offer. Home buyers must meet HUD's guidelines and closing dates.
A good faith deposit of $1,000 or $500 based on the offer price is required when you submit the offer. If your bid is rejected, your earnest money will be returned to you.
If you are successful with your bid, you have 24 Hours to have the signed sales contract and all paperwork submitted to the HUD office. If HUD does not receive the required documentation within 24 hours, the house returns for bid. This settlement date is usually 30 to 60 days after the date the contract is accepted.
Prospective home buyers may obtain a Hud home provided that the prospective home buyer has the money to purchase the house or the home buyer can meet the mortgage requirements to buy it.
You will be required to sign a statement that you have not purchased another HUD home in the previous twenty-four months of the offer and you will reside the home for no less than twelve months.
The Department of Housing and Urban Development (HUD) and it's subsidiary, the Federal Housing Administration (FHA) does not offer direct mortgages to homebuyers of HUD owned homes. Buyers who require financing must obtain financing through a lender, bank or mortgage broker. You obtain FHA financing through approved banks and mortgage brokers.
The Federal Housing Administration will provide financing to eligible home
buyers on FHA approved homes.
HUD prefers to sell the HUD homes to buyers who intend to occupy the home, however, if there are no acceptable offers during the priority period, unsold HUD homes are made available to investors.
HUD is concerned about fraud regarding owner occupancy.
As a consequence of reducing fraud, HUD requests bidders who submit offers on a property during the first offering to sign a document that they have not bought another Hud house in the previous twenty-four months of their offer and that they will occupy the home for a minimum of twelve months.
The agent is also required to sign a document verifying that he or she does not have information that the buyer is not an investor
HUD homes are sold without a guarantee or warranty. This means that HUD is unlikely to correct any problems with the home. However, just because a HUD home needs fixing up or some repair, a HUD home may still be a great buy!
The Department Of Housing And Urban Development encourages home buyers to obtain an expert home inspection on HUD homes prior to making an offer.
HUD does not warrant the condition of the HUD homes, and will not pay for the repair of any problems.
Did you know that you can use an FHA (K) streamline loan to make improvements to HUD homes? Read more