What is a HUD Foreclosure?
HUD is the term used for the name of the US government’s Department of Housing and Urban Development. HUD’s mission is to increase homeownership, support community development and increase access to affordable housing. To do so, HUD sponsors special mortgage programs and insures loans for qualifying home owners. These loans are not immune to foreclosure, however. When someone with a HUD-insured mortgage cannot meet the payments, standard foreclosure activity follows, and the lender repossesses the home. But, unlike an REO foreclosure, the HUD homes transfer ownership to the government (HUD), who then pays the lender what is owed. HUD then becomes the motivated seller interested to sell the home as quickly as possible, often at a discounted price. There is great potential for significant savings in buying one of these government repossessed homes.
HUD foreclosures are sold “as-is,” without warranty. That means that HUD will not pay to correct any problems. Even if HUD homes need some repair (and not all of them do), they can offer some of the best bargains in home sales because special government sponsored buyer programs may be available on these homes. And available only on government repossessed homes. These programs will change from time to time, so qualified buyers need to act fast to secure the best deal available on HUD homes.
Programs will from vary state to state. The more common programs include purchase price assistance (including a 50% discount off the list price of HUD homes), vouchers, special low cost loans to help pay for repairs, closing cost assistance, and more. Be sure to read up on these programs as you learn more about how to buy a foreclosed home.
One popular program is called Good Neighbor Next Door (GNND). Certain homes in HUD’s foreclosure listings are located in designated revitalization areas. To encourage sales of these homes to stable, upstanding citizens in these areas, HUD offers a 50% discount from the list price of these HUD homes. In exchange for the discount, buyers must commit to a minimum occupancy term, usually 36 months or more. Special qualification requirements and mortgage programs are part of GNND, so you will need to be sure to review these details with the special contact person responsible for the sale. And these homes are only available for a brief time: only 5 days from the day of listing. So be organized and be sure you are regularly watching out for the HUD foreclosure of your choice or you might miss your chance.
Homeownership vouchers may also be available to help you purchase government repossessed homes. For those who qualify, HUD’s local Public Housing Agency can provide financial help to first-time home buying families. Depending on your qualification, you could apply this financial assistance, usually covering 30% of your monthly payment, to mortgage payments on a HUD foreclosure you buy.
Since HUD foreclosers are sold “as-is”, they may be in need of repair prior to move-in. To help buyers afford to make repairs, special loans are available under the 203(k) program to help home buyers pay for both their home purchase and the cost of repairs. Home repair loans can be expensive, but the 203(k) allows a single, long term loan which save the borrower and lender time and money. By rolling all costs into a single, affordable payment, the buyer of the HUD foreclosure can enjoy a better quality of life and the lender can be assured the property is in better shape and remain secure in receiving payments.
Other programs may be available where HUD pays closing costs, provides buyer credits or issue special affordable loans in conjunction with the FHA (Federal Housing Authority). With great inventory to choose from, and a variety of programs to assist buyers, HUD homes are a fantastic opportunity for home buyers right now.
How do you find a HUD Foreclosure?
Our site maintains a database of government repossessed homes available across the US. Our advanced data collection and data organization technology gathers foreclosure listings from hundreds of different sources. Our database maintains over 1 million listings, including HUD homes inventory, REO properties, real estate foreclosure auction, and even preforeclosures. Access is available to all our registered users to search for a dream home from all the listings.
How to profit from a HUD Foreclosure
Like all distressed real estate, government owned property offers buyers unique opportunities to profit. Owner occupants utilizing one of HUD’s special purchase programs have some of the best opportunity to build wealth through home ownership. Taking advantage of available drastic price discounts, special affordable financing programs and low down payment plans can make the purchase of HUD homes an instant win. Some programs have qualification requirements so check to see how many programs you can take advantage of and consider them all. Otherwise, HUD homes are available for sale to the general public at sometimes extraordinary prices. So, any search of low cost foreclosed homes must include government repossessed homes from HUD.