Free Foreclosures Database offers foreclosure investors free access to tens of thousands of HUD foreclosures. HUD receives titles to foreclosed homes when homeowners default on Federal Housing Administration (FHA) mortgages. HUD has direct responsibility for overseeing FHA’s activities, including the deposition of HUD foreclosures.
Since 1934, more than 30 million Americans have become homeowners under the FHA program. Many of these borrowers represent first-time home buyers who could not meet the tighter underwriting standards typical for conventional mortgages.
FHA mortgages have more lenient underwriting standards for home buyers, including 3% to 5 % down payments (versus 10% to 20%) and lower credit scores. The reduced criteria allow more borrowers to qualify for home mortgages, but it also make for homeowners who are more vulnerable to economic whims and contributed to the high amount of HUD foreclosures across the nation.
FHA does not lend money directly to borrowers, but has approved mortgage lenders who make loans available to buyers. FHA attracts lenders into the program by guaranteeing the loans if borrowers default.
HUD Homes Auction Process
Before foreclosed properties become HUD foreclosures, the homes go through an auction process similar to the proceeding employed for other foreclosed homes auctions.
HUD foreclosures must go to the highest qualified bidder.
Foreclosure properties that fail to receive sufficient bids to pay off the defaulted loan amount and expenses become HUD homes. Banks file claims with HUD for the outstanding mortgage obligations on these homes.
HUD pays the claims and receives ownership of the foreclosed homes.
Bank Owned Foreclosures or HUD Properties
In many ways, HUD is in the same position as banks that own REO properties. Each party is a reluctant foreclosure properties owner and has motivation to sell foreclosed homes as quickly as possible.
Both home buyers and real estate investors can find good deals. When purchasing HUD foreclosures in need of repairs, purchasers can find cheap houses for sale.
HUD foreclosures also offer an excellent opportunity for first-time home buyers and people who desire to move up to larger homes. HUD foreclosure listings include single-family home, condominiums, and residential properties from two to four units.
Investors who want opportunities to build their cash flows and enhance property portfolios can also take advantage of the glut of HUD homes on the market. However, the rules specify the agency must make HUD foreclosures listings available to foreclosed home investors only after the expiration of the “Exclusive Listing” period.
During this ten-day period, only owner-occupants can bid on HUD foreclosures. After 10 calendar days has expired, foreclosure investors can make offers.
It is easy to search for HUD foreclosures in the Free Foreclosures Database and find a foreclosure condominium or house in any region of the country. We have thousands of cheap homes for sale in our HUD homes listings.
When you find a property you would like to view, contact a licensed real estate agent authorized to show HUD properties. The agent can also help you prepare a competitive offer and the proper paperwork for any of the foreclosed homes in the Free Foreclosures Database.
HUD views each offer it receives on HUD homes and accepts the highest bid.
FHA Financing for HUD Foreclosures
Investors who buy foreclosed homes must pay cash or arrange for other sources of financing.
Home buyers who are buying the foreclosure as their primary residence qualify for the following financing programs under FHA:
- HUD foreclosures requiring $5000 or less in repairs qualify for the 203(B) Repair Financing.
- Homes in need of more substantial repairs may qualify for 203(K) Streamlined Financing for up to $35,000.
Home buyers of foreclosure homes can also apply for an Energy Efficiency Mortgage (EEM), which finances 100% of cost of effective energy improvements to HUD foreclosures.