1b. The mission of HUD
1c. Where do HUD homes come from
1d. Who is qualified to buy HUD homes
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It is important to know who is eligible to purchase HUD homes before deciding to purchase government foreclosures. Any eligible buyer that has the cash or pre-qualification through a lender to cover the transaction on the home may purchase a HUD home. Even HUD employees and their family members may purchase HUD homes, as long as the Director of HUD’s Office of Single Family Asset Management gives approval in writing.
To purchase a HUD home, buyers have no need to fall into a particular income category and do not need to be first-time homebuyers. While the homes offered range in price greatly, they are affordable to borrowers who have low and moderate incomes.
The program’s goal is to offer homeownership opportunities to purchasers who will be owner occupants. This goal provides owner-occupant purchasers with priority over investor buyers, although investor buyers often have the opportunity to bid on HUD homes as well. Investors may bid on a HUD property, but they may not bid on these government foreclosures until the first 30-day listing period has passed.
Who is an owner-occupant purchaser?
HUD defines owner occupant purchases as buyers who will be living on the property for a minimum of 12 months as their primary residence. When bidding, owner occupant purchasers will be required to sign the Owner Occupant Certification Form to qualify
Four categories of buyers may bid on HUD homes, and these categories include the following:
Owner occupants must live on the property as their primary residence for a minimum of one year. When bidding, they are giving priority within particular cycles of the listing process. After purchasing a HUD home, they may not participate in further HUD sales for at least two years.
Investors have no restrictions on the quantity of homes they may acquire in this manner. However, they may not bid until the 31st day of the listing period.
Good Neighbor Next Door
This includes firefighters, teachers, emergency medical technicians and police officers who may purchase homes for a 50% list price discount. They may only purchase a property that is within a Revitalization Area and the property must be occupied as their only residence for a minimum of three years.
Nonprofit Agencies and Government Agencies
In order to bid, NAID numbers are required and they are given access to the special “First Look” program. Properties that have been on the market for over 60 days may be purchased in bulk. For properties that stay on the market for 180 days, these organizations may then make “Dollar Home” purchases.
Recent Changes for Consumers to Be Aware Of
Consumers must be aware that policies, rules and procedures surrounding HUD homes can quickly change. Recent changes have taken place in the past couple years, notably in September of 2010. At this point in time, the United States Department of Housing and Urban Development transitioned into contracts with specific companies that now serve as Mortgage Compliance Managers, Field Service Managers and Asset Managers. This was done as a part of the M&M III, the Management and Marketing program in its third generation. These contracts were put into place to help sell the HUD inventory faster, to reduce risk and to help increase sale prices.
These changes brought about five important changes to the HUD government foreclosures program that consumers should be aware of today:
- Changes have been made to the exclusive owner occupant period, which help to further emphasize sales to owner occupant buyers.
- Brokers and agents must use a new bidder registration process.
- Separate contractors are now used for marketing and sales, known as Asset Managers, and for property management, known as Field Service Managers.