What is a HUD House

A "HUD Home" is a property owned by the United States Department of Housing and Urban Development (HUD).  HUD acquires the property through foreclosure of an FHA insured mortgage.  FHA is a publicly funded mortgage insurance program which allows purchasers to buy a home for a lower down payment than conventional financing.  The mortgage insurance premium (MIP) is paid up front and closing and the premium is renewed annually, this is generally collected in the owner's monthly mortgage payment.  There are strict limits on the loan amount for an FHA mortgage and these limits differ based on the location of the property.  In Alabama most areas have an FHA loan limit of $271,050 for single family properties.  This link provides the limits in Alabama by county for one to four unit properties.

When a lender forecloses on an FHA mortgage, they have the opportunity to make a claim on the insurance, FHA pays the lender the amount of the claim and the property is conveyed to HUD.  HUD then will perform maintenance and repairs as needed to protected the security and safety of the property and will obtain an appraisal, HUD will assign the property to a Marketing and Management (M&M) contractor who will then assign the property to a Neighborhood Listing Broker (NLB), currently there are three M&M contractors in Alabama, each of them contract for services with dozens of NLB;s throughout the state, any registered real estate licensee in Alabama can sell a HUD property. 

It is very important that a buyer and their agent understand the process for purchasing a HUD owned property, these steps will be detailed in future posts.  Bo Evans Realty has twenty years experience in the sale of HUD owned properties throughout the state and is uniquely qualified to assist buyers in this process.

What a HUD Home is NOT
HUD Homes, while having the potential for being excellent deals for buyers, there are many things that they are not:

• HUD Homes are not rental properties
• HUD Homes are not homes for buyers who cannot otherwise purchase a home, although some excellent buyer incentives exist for home purchasers.
• HUD Homes are not "rehab" homes.
• HUD Homes are not meant to be investor properties, although they can be excellent opportunities for investors in some circumstances.
• HUD Homes are not auction properties.
• HUD Homes are not a first time buyer program.

Want to know more about HUD Homes?  Give us a call at 1-800-209-4843 or email boevans@knology.net