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.

HUD homes are FHA foreclosures. The value of a HUD foreclosure is determined by an appraisal and is usually set at fair market value. The quality of the home as well as the location will determine what the value of a HUD home is set at. A home that is in need of major repairs will have its price adjusted to reflect this, however the homes are always sold as is and all prospective buyers should be carrying out inspections prior to making an offer. However most investors and buyers find that the low price of home always negates any repairs that need carrying out.

HUD foreclosure homes are usually sold via a bidding process. Agents are able to accept bids for a certain time period and at the end of bidding HUD may select the highest bid as the final buyer. Only registered agents may place a bid on your behalf.

Just about anyone is able to buy a HUD home as long as you can qualify for a loan (or have cash). HUD homes are always offered to owner-occupiers before investors, in order to give people a chance to buy their own home. Unsold properties are then available to anyone, and sometimes even given away for $1 for community use.  Under the Good Neighbor Initiatives program some properties are available of a reduced price to teachers, police officers, firefighters, emergency workers and non profit organizations.

To find HUD foreclosures in your area, check out Foreclosures.com.