We're Experts in HUD and Bank Owned Homes
If you are interested in a HUD, Bank Owned, Foreclosure, or Short Sale transaction, I'd be glad to provide any additional information you need, or to assist you during the transaction. Call me at 801-554-4560, or send an e-mail today for professional guidance!
Corie Seymour
HUD Homes—What are They?
When an individual has an insured mortgage by the Federal Housing Administration and then can’t make their payments, the home is foreclosed upon by the lender. At this point in time the balance of what is owed to the lender is paid by the FHA and subsequently the home becomes property of the United States Department of Housing and Urban Development. As quickly as is possible, the home is sold at the current market value. The properties are sold or maintained by MCB, a marketing and management contractor for HUD 1 to 4 properties, according to the guidelines set forth by HUD.
HUD Homes—How are they Sold?
The MLS, Multiple Listing Service, and the Internet lists the HUD homes for sale. Electronic bids may be placed by agents and registered brokers on a purchaser’s behalf. The bid that is the highest and that meets the HUD requirements will be chosen as the provisional winner depending upon the receipt of the necessary documents.
HUD Homes—Who Can Buy One?
A HUD home may be purchased just like any other home. As long as an individual has cash to pay, or qualifies for a mortgage, then a HUD home may be purchased. However, a broker or agent registered with HUD must bid on the property for an interested individual. An additional requirement is that potential purchasers have proof of cash or a pre-qualification letter for a mortgage before buying a HUD home.
HUD Homes--Who May Sell One?
A HUD home may be sold by any broker registered with HUD or any licensed real estate broker. Brokers and agents should be registered with HUD before they begin trying to sell a HUD home.
Property Access
Potential purchasers of a HUD home must be accompanied when visiting one of these homes for sale. HUD regulations require that all potential buyers be accompanied by the broker or agent at all times when visiting the home before closing. Any problems accessing a property should be addressed with the local broker, who is identified on the internet. Individuals performing certifications, inspection, appraisals, or other services must be accompanied by a broker or agent as well. Keys are only allowed for agent or broker use and are not allowed to be borrowed by others.
Repairs, Improvements, and Occupancy Before Closing
No work may be done on any HUD property before closing. Even though a bid is accepted, that does not mean ownership has transferred. The home is not considered sold until it has been recorded with the buyer’s name. The home may not be entered, occupied, or used for storage until the ownership has been transferred. Doing so is considered trespassing, which could result in the cancellation of the sale, forfeiting deposits, and even bidding privileges suspension for the agent firm.
Financing Requirements for a HUD Home
Financing is not provided by HUD for HUD properties. FHA financing, cash, or typical bank financing may be used to purchase HUD properties. A mortgage pre qualification letter or a verification of cash funds must be obtained prior to bidding on a HUD home.
Short Sales—What are they?
A short sale occurs when a property has more money owed on it that it could be sold for. These short sales may be closed in as quickly as four weeks or as long as six months. Bids are typically reviewed by a board of directors. Generally used to avoid foreclosure.
Bank Owned Homes—What are they?
When the bank takes back a property because the mortgage was not paid, the property is then referred to as a bank owned home. The mortgage holder or bank is then referred to as the REO. The property becomes a Repo.
What is Third Party Approval?
During the first stage of foreclosure, sometimes the lender allows the mortgage holder the opportunity to sell the property. In order to do this, the mortgage holder must be approved first and this is what is referred to as “third party approval.”
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