HUD Homes Update
The Federal Housing Administration (FHA) recently doubled its exclusive listing period on certain HUD single-family and real estate-owned homes. This will allow owner-occupant buyers, HUD-approved nonprofit organizations, and government entities more time to bid on the properties before investor competition.
Let’s back up – what is a HUD home?
HUD is an acronym for United States Department of Housing and Urban Development. These homes are foreclosed properties that were originally purchased with FHA loans (Federal Housing Administration loans).
These properties become HUD homes after the homeowner is no longer able to pay their monthly mortgage payments and defaults on the loan. The FHA comes in and pays the remaining mortgage balance to the lender, seizes the property, and puts it back up for sale.
HUD homes are not listed normally – you can only find them on HUD’s website, HudHomeStore.gov. If you’re interested in a HUD home in your state, you have to hire a real estate agent who has been approved by HUD. The real estate agent will then help purchase the home through an auction. Once the bidding ends, HUD reviews and chooses the highest offer – HUD might reopen the bidding process if they believe the offers were not high enough.
Now that you know what a HUD home is, what does the new listing period mean?
The listing period for bids will go for 30 days before its open for investors – that’s up from a 15-day exclusive period. The change begins March 1st.
The FHA is hoping the updated listing period will make more HUD-owned properties available to owner-occupants and non-profit organizations. Principal Deputy Assistant Secretary for Housing and the Federal Housing Administration, Lopa Lolluri, explains, “By extending the time frame […] we are offering families a better chance to purchase a quality HUD-owned home to live in, build equity, and create generational wealth.”
With how intense the housing market has been the past two years, the grace period might also allow for more first-time homebuyers to have a little wiggle room in any competition.
For more real estate news and guides, stop by Pacific Alliance Title’s Blog.