FREQUENTLY ASKED HUD QUESTIONS

What is a "HUD Home" ?

The United States Department of Housing & Urban Development (HUD) oversees the Federal Housing Administration (FHA), which provides federal insurance on home mortgages. When someone with an FHA mortgage can't meet the payments, the lender forecloses on the home; HUD pays the lender what is owed; and HUD takes ownership of the home. At this point, the house becomes a HUD home.

After the lender conveys the property to HUD, the Management & Marketing Contractor (M&M) begins the process of managing and marketing the homes according to HUD guidelines. The (M&M) for NY State is National Home Management Solutions (NHMSI).

 

Who can buy a HUD home ?

Anyone ! If you have the cash or can qualify for a mortgage, you can buy a HUD home. Buyers must work through a registered HUD real estate broker to bid. Prudential Action Real Estate is an approved HUD broker.

 

Are HUD homes meant for people with low incomes ?

HUD homes range in price, but most are affordable for low and moderate income Americans. Click her for a FREE Mortgage Prequalifcation.

 

Is it true I can get a HUD home for a dollar ?

No. HUD sells homes at market value - that means that the price is based on the price of similar homes sold in the area. There is a $1 homes program for local governments and municipalities.

 

HUD used to sell their properties differently ? What happened ?

In HUD hired national marketing and management companies to manage, market and sell their national inventory of foreclosed properties. These properties began to come onto the market in 1999 and is expected to continue.

 

If the HUD home needs repairs, will HUD make them ?

HUD homes are sold "As Is" without warranty. That means that HUD will not pay to correct any problems. But even if a HUD home needs fixing up - and not all of the do - it can be a real bargain ! For example HUD's asking price on the home will reflect the fact that the buyer will have to invest money to make improvements. HUD allows for Home Inspections at the buyer's risk and expense. HUD might offer special incentives such as an allowance to upgrade the property, a moving allowance, or a bonus for closing the sale early. And keep in mind that on most sales, the buyer can request HUD to pay all or a portion of the financing and closing costs.

 

How do I buy a HUD home ?

You have already started by reviewing this website and contacting Prudential Action Real Estate. Please call us at 718-835-8800 or E-MAIL:website@glensold.com We have all the necessary forms and are fully aware of all the procedures required for the contract presentation and eventual closing. Our HUD properties are updated regularly, so please check back with us. Normally, HUD homes are sold in an "Offer Period". At the end of this "Offer Period", all offers are opened and basically the highest bid is accepted. If the home isn't sold in the initial "Offer Period", you can submit a bid any business day. If your bid is acceptable to HUD, usually with 48 hours of your bid, we will contact you immediately.

 

Who puts a price on these HUD homes ?

Licensed and accredited appraisers who are familiar with their specific market areas, determine the fair market value based on comparable sales within the same marketplace. They also calculate the appropriate adjustments based on the properties existing condition. The appraiser also provides information necessary to determine if the property meets minimum property standards for FHA financing.

 

What does I, U or IE mean on the listing of the property ?

I - Insured Property, can obtain 203b FHA financing in an "as is" condition.

U - Uninsured Property, unable to obtain 203b FHA financing in an "as is" condition. Must use 203k rehab loan, cash or other type of conventional loan.

IE - Insured with Escrow Property, if 203b FHA financing is used, an escrow is setup at closing and released upon repairs being completed.

 

If my bid is accepted, then what happens ?

We will assist you through this process including all the paperwork and forms. You can find out if your bid was accepted and results of the bidding on this website within 48 hours of the bid deadline. You will be given a settlement / closing date, normally within 30-60 days of the offer acceptance.

 

Can I bid more than the listed price ?

You can bid as much or as little as you may want or can afford. Generally the highest bid will be accepted.

 

How can I get a loan to buy a HUD home ?

HUD does not make loans directly. We work with a number of HUD approved lenders

that can prqualify / preapprove you for a mortgage. They can they offer you a Direct FHA/VA loan. A prequalification is required if a purchaser is applying for a loan to purchase a HUD owned property. This prequalification must be valid for 60 days and must not be altered in any way.

 

What about closing costs ?

Once the applicable mortgage amount and required down payment has been determined in accordance with the Mortgagee Letter 98-29, HUD allows a up to 5% (of the sales price) sales incentive to cover borrowers portion of allowable closing costs and prepaids. All mortgage loan amounts are limited to statutory loan limits established for the area.

 

How much money do I need in TOTAL to buy a HUD home ?

As a minimum, approximately 6-7% of the sales price or the mortgage amount (whichever is greater). This amount can be determined exactly with a bid and mortgage prequalification.

 

What are the local loan limits ?

loan limits are outlined at www.glensold.com/loanlimt.html

 

Can I buy a HUD home as an investment ?

Most HUD homes are initially offered on a priority basis to owner occupant purchasers. Following this "Offer Period", the unsold properties are then available to all buyers, including investors.

 

When is the next HUD auction ?

That program has been discontinued. As of today no auctions are scheduled or anticipated. Contact Prudential Action Real Estate if you want an update as to new properties on the market.

 

Is there a special program for non profit organizations and government agencies ?

Yes there are. Approved non profit organizations and government agencies may purchase properties at discounted prices for use in local housing and homeless programs.

 

Is there a special program for law enforcement officers and teachers?

Yes. Next Door Listings are made available per HUD guidelines. In an effort to ensure that home ownership opportunities are made to law enforcement officers and teachers who are charged with the responsibility of ensuring the safety, education and well being of residents in the communities they serve, properties are being made available at a significant discount (up to 50%) for those who plan to occupy the home as primary residence for at least 3 years. Please contact us for more details.

 

I submitted a bid that I need to cancel, what do I need to do ?

If you change your mind before the bid deadline, fill out the bid cancellation notice at our office, a faxed copy is ok. If you change your mind after the bid deadline and your bid is not accepted, your money will be refunded to you. If you change your mind after the bid deadline and your bid is accepted, please refer to earnest money refund rider available at our office and attatched to your contract.

 

There are no homes for sale in the areas that I am interested in, what should I do ?

We will be bringing properties onto the market regularly. Please monitor this website regularly for new properties.

 

I know of a HUD home and it is not listed, how can I bid on this house ?

Due to the high number of properties that have been foreclosed and this new program to sell them, be patient and the properties will be marketed and you will have the opportunity to bid. You can contact our office with a specific address and we will contact you upon that property becoming available.

 

Is there anything else that I should know about HUD homes ?

Houses built prior to 1978 may have lead based paint, which can cause harm to your family. Upon making an offer for any property we will review the necessary lead booklets and documentation and your options.

 

There are strict time frames on the bidding for these properties. Your cooperation in viewing and inspecting these properties is very important. Below are the items that are recommended that you have to bid on the properties:

 

* Names, Addresses and Social Security numbers for ALL purchasers.
* Contacts for ALL Purchasers (Work, Home, Fax, Beepers, Cellular, E Mail, etc).
* Proof of Current Annual Income for ALL Purchaser (W2, 1099, Tax Returns, etc) and 2 year employment history.
* Current Monthly Debts, do not include current rent.
* Proof of Assets available to Purchase (Bank Statements, Stock / Bond Statements, Retirement Plan Statement, Life Insurance, etc).
* A Certified Check or Money Order for $1,500 made payable to Prudential Action Real Estate, as agent. This will be deposited into a separate escrow account pending outcome of your bid. A receipt will be given. Refunds will be given within 3 business days after notification if your offer is not accepted or applied to another bid.

Click here to receive a FREE Mortgage E Prequalication !

Upon your bid you will need to complete an offer worksheet , HUD Sales Contract #9548, Agency Disclosure, Lead Disclosure as well as other documentation. We will complete these with you.

FHA financing, including 203K rehab loans will be available with as little as 6-7% total money needed to buy to qualified applicants based on information provided above.

Please have the above information / documentation available to you upon property previews for failure to provide ANY of the above may result in your bid not being considered.

We wish you the best of luck in the bidding. Please call us at 718-835-8800 or e-mail us at website@glensold.com with any questions.

 

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