HUD Foreclosure

A HUD foreclosure is a home that has been acquired by HUD due to foreclosure action taken on an FHA insured mortgaged. HUD foreclosures present investors with unique opportunities to find a rare bargain priced property - often much cheaper than even regular foreclosed homes that are for sale.

HUD is an acronym for the US Department of Housing and Urban Development. The Federal Housing Administration (FHA) provides mortgage insurance to lenders which allows banks and lenders to lend larger amounts of money than they would normally be able to. For example, with FHA insurance a lender may be able to lend 95% of the property price rather than 80% without insurance. Lenders usually pass on some or all of this insurance cost to borrowers. The problems that are occurring now in the sub-prime crisis are partly due to this increased lending ratio - people were simply borrowing more than they could afford to pay back, leading to a massive increase in foreclosure sales, including HUD foreclosure sales and auctions.
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