Mortgages

Housing and Urban Development

The Department of Housing and Urban Development is a governmental agency that heads another agency, the Federal Housing Administration better recognized as the FHA that is created to lower the restrictions and costs for first time home buyers.

When lenders are forced to foreclose on FHA properties, HUD usually pays off the mortgage and retains ownership of the property.

The Department of Housing and Urban Development than takes these homes and sells them in a sealed bids process. They determine the starting price from a professional estimation of the value of the home. The home is advertised for ten days and only occupied owners may bid during this time.

After this time investors may begin bidding on the home until HUD finds an attractive bid is made which is determined on the bid opening date. HUD homes usually sell above the initial price that was generated by HUD to begin the bid.

In some areas an Earnest Money deposit is required. The amount can vary depending on the location but can amount up to 50% of undeveloped land. This deposit must be made in the form of Bank checks, cashiers checks, or money orders, which are all certifiable.

FHA loans will only finance ninety seven percent of the homes value that is obtained through a HUD bid. This means if the buyer is responsible for paying the difference between the bid and the homes value plus the three percent required down payment.

HUD homes are attractive because there is a lot of room for negotiation and opportunity to profit off of the purchase. You can find these properties on the internet by management companies that are contracted by HUD to manage these properties. HUD homes are usually available at discounted prices to certain professions such as police officers and teachers as well as non- profit organizations.