Some Facts About Hud fha Properties
The Department of Housing and Urban development (HUD) and The Federal Housing Administration (FHA) have a long history of providing affordable housing to the people of America.
Many people do not even know about these programs, so we will take a look into them today.
A recent article from foreclosurenet.com, “How to buy HUD-FHA properties: facts about the process,” gives potential buyers all of the information about these two entities that they need to know.
“The U.S. Department of Housing and Urban Development (HUD) was established in 1968. It was originally developed to manage federal housing and community development programs.” “HUD incorporated numerous housing agencies and assumed administrative responsibility for them. One of these agencies was the Federal Housing Administration (FHA). Since 1971 the agency has been commonly known as HUD/FHA.”
The things that the two programs do can get a little confusing, since they deal a lot with foreclosed properties. That is how they are able to provide housing at such intense discounts.
“The old FHA programs and the newer HUD programs act as an insurance agency for banks, savings & loans and mortgage bankers who make real estate loans to buyers and investors. HUD/FHA does not make the loan, they only insure the lender against loss in the event of default.”
Basically how it works is that HUD properties are sold to the public when HUD/FHA mortgages are foreclosed.
They will get their properties back after they have been foreclosed upon, and then they are able to sell them to the general public.
“When HUD gets a property back, it turns it over to its Property Disposition Department which first secures the property from vandalism or damage. Next, this department determines if the property will be sold directly or through an outside broker.” “If a broker is used, he must complete the necessary repairs required by HUD, secure the property, advertise the property, accept sealed bids, control the escrow account and make sure the escrow closes. HUD will pay a 6% sales commission to agents involved in the sale, whether sold through a broker or sold by HUD directly.”
HUD also allows regular real estate agents access to HUD properties.
“An agent bidding on a HUD property, could effectively reduce his bid price by the amount of commission he may earn on the sale. Clearly, this gives the agent an unfair advantage. In addition, an authorized HUD broker will receive lists of HUD properties before the general public does. A broker could prevent the public from having access to properties. To buy a HUD property, you must contact a licensed and approved HUD broker or other agent authorized to sell HUD owned homes. All offers are submitted through him.”
Although it may seem like a great deal to get a HUD property, there are definitely some pitfalls associated with these types of properties. First of all, they are not always in the best condition and the property is sold “as is.” Also, you have to pay cash for these properties.
If you think that this may be of something of interest to you, contact your local HUD agent or broker.