With HUD properties, title seasoning, FHA loans, and short sales, real estate investors have had some confusion regarding the rules. This article will clarify all of these issues for you.
HUD is the United States Department of Housing and Urban Development, a government agency whose goal is to increase homeownership and support community development . The Federal Housing Administration (FHA), which is part of HUD, provides mortgage insurance on loans made by FHA-approved lenders throughout the United States.
HUD and FHA come into play in three different scenarios in the investor/foreclosure arena.
HUD Foreclosed Properties
When a person gets an FHA loan, it is funded through a private lender and the loan is insured or backed by the Federal Housing Administration. When the loan is in default, FHA pays out the lender and take an assignment of the loan. When the property is foreclosed, it is owned by HUD. HUD then offers these properties for sale to both owner-occupants and investors. The properties are offered on the local MLS computer database, but you have to submit an offer through a HUD-approved real estate broker. The offer is made under a bid process, under which the HUD will either accept or reject your offer depending on what other offers are submitted. An investor can buy, hold, or flip these properties if their offer is accepted.
FHA Loans and Title Seasoning
HUD properties are available all over the United States, and make great investments for anybody that is interested. These homes often get a bad rap for being in bad condition, but in all actuality they are not any worse than other foreclosed homes that are available. Just like anything else, there are some HUD properties that are in good condition, and some that are in need of repairs. It is simply a matter of how well the past owner cared for the home.