January 26, 2022
They are sometimes known as HUD homes, more formally as HUD real-estate owned homes–properties that were purchased with FHA mortgages that later fell into loan default and ultimately foreclosure. The FHA and HUD, in such cases, have a reimbursement program for the lender but the property itself reverts back to HUD upon foreclosure.
The HUD official site states, “A HUD home is a 1-to-4 unit residential property acquired by HUD as a result of a foreclosure action on an FHA-insured mortgage. HUD becomes the property owner and offers it for sale to recover the loss on the foreclosure claim.”
And now, thanks to a move by the FHA and HUD, there are expanded opportunities for borrowers who want to be owner-occupiers to bid on and purchase these HUD homes before the properties are made available to investors.
A press release issued in the earliest weeks of 2022 notes that the FHA has increased the exclusive listing period for non-investors to bid.
According to a press release at HUD.gov, “ this exclusive listing period for individuals, families, HUD-approved nonprofit organizations, and governmental entities will increase from the current 15 days to 30 days for new listings of single-family homes” that are listed as “insured” or “insured with escrow” on HUD’s REO sale site, HUD HomeStore.
The press release adds that such properties can be purchased with a typical FHA Single-Family Home Lona (the FHA 203(b) program), “meaning that they meet FHA’s minimum property standards and may only require cosmetic repairs or non-structural repairs up to $10,000.”
It’s a move that was announced by the White House in September of 2021, and this is intended to increase the supply of affordable housing in the American housing market.
According to Principal Deputy Assistant Secretary for Housing and the Federal Housing Administration Lopa P. Kolluri. “By extending the time frame individuals have to bid on an REO property, we are offering families a better chance to purchase a quality HUD-owned home to live in, build equity, and create generational wealth.”
This announcement is not the first move to bring more affordable housing opportunities to American borrowers; last year HUD held a vacant loan sale, providing “priority bidding opportunities” for half of the mortgages “in multi-loan pools” to non-profits and local governments.
You can learn more about HUD REO options via the HUD Home Store which is the webpage that lists HUD REO properties currently offered.