Wednesday, September 26, 2012

HUD and FHA Lower Barriers To The Purchase of Mortgages For Distressed Hud Homes

HUD Homes are a Good Buy

Even as the US housing market starts to pick up steam, many real estate investors and prospective home buyers are noticing that now is one of the best times in many years to purchase real estate, whether as a residence or as an investment property. The federal department of Housing and Urban Development (HUD) has recently announced competitive auctions at which mortgage loans for single family HUD homes in default will be sold.

These mortgages will be sold in pools as part of the Distressed Asset Stabilization Program (DASP), an expanded version of a previous Federal Housing Administration (FHA) program in sealed bid auctions to be held in September of 2012; qualified buyers and investors will be allowed to bid for ownership interest in these distressed properties. Buyers who win these auctions will then have the opportunity to either earn an income through becoming the servicer of these defaulted mortgages.

The goal of the program is to help along the recovery of the housing market in the United States, especially in metropolitan areas which have been hit especially hard by the housing slump and foreclosure crisis. HUD has said that they see benefits for both buyers as well as the purchasers of distressed HUD homes. Purchasers who choose to service the mortgage will be able to earn an income from the homeowner’s mortgage payments, while at the same time providing a service to the surrounding neighborhood and the community at large by keeping these properties out of foreclosure listings.

The sale of these assets will also benefit the housing market as a while by reducing the Federal Housing Administrations costs and essentially, freeing up assets for this government agency to put to use helping other Americans become homeowners and fueling the housing sector’s recovery. Similarly, homeowners who are in default on the mortgages which are being sold at auction by Housing and Urban Development may have the opportunity to stay in their homes by working out a loan modification with the purchaser of their mortgage. Many other homeowners may be able to negotiate a lease arrangement and stay in their home in this manner.

Who Qualifies To Participate In The Auctions For Defaulted Mortgages On HUD Homes?

The FHA has announced the eligibility criteria for participation in the auction program. According to the FHA and HUD, qualified bidders who will be approved to submit sealed bids for distressed HUD mortgages must have a net worth of $5 million or more (with this figure to be calculated in compliance with Generally Accepted Accounting Principles). Unfortunately for the average would-be homeowner, it seems that most bidders will need to be corporate entities of some sort, including limited liability companies, partnership, business trusts, investment companies, banks and the like.

However, there are plenty of options available to buy homes at very low prices even for those who do not qualify to bid for these federally administered auctions. There are a large number of foreclosed properties currently on the market and for prospective HUD homes buyers who know where to look, there are foreclosure listings available which include residential and commercial properties located in every part of the country.

Websites like offer listings of HUD homes and extensive nationwide foreclosure listings, as well as rent to own properties, properties for sale by owner and other homes and commercial properties which are available at costs far lower than they would be available through traditional real estate transactions. Unfortunately, not many people will qualify to take part in the HUD/FHA auctions for the distressed mortgages on HUD homes, but with so many foreclosures and other non-traditional home purchase options available at present, it’s still a perfect time to buy a home, no matter who you are.

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