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HUD Foreclosures

What is a HUD Home?

When someone with a HUD insured 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. HUD then sells the home at market value through a Marketing & Management Contractor such as PEMCO. 

Who can sell HUD homes?

Only a licensed real estate agent or broker who is registered with HUD may sell HUD Homes. Mission Country Properties is a Registered HUD Broker.

Who can buy a HUD home?

Anyone who can qualify for a mortgage or who can pay cash may buy a HUD home.  Owner occupants must live in the house as their primary residence for at least one year and may not purchase another HUD home as an Owner Occupant for two years.  Buyers must use a broker or agent who is registered with HUD to place a bid on a property.  Mission Country Properties is a Registered HUD Broker.

How can I buy a HUD home?

Start by calling Mission Country Properties. Your real estate agent must submit your bid for you. Normally, HUD Homes are sold in an "Offer Period." At the end of the Offer Period, all offers are opened and considered to be received simultaneously, and, basically, the highest acceptable net bid is accepted. If the home isn't sold in the initial Offer Period, you can submit a bid until the home is sold. Bids can be submitted any day of the week, including weekends and holidays. They will be opened the next business day. The results from the review of all accepted bids are posted on our website.  It is the responsibility of the real estate agent to check our website for accepted bid information and ensure that all the required forms are properly filled out and sent to us within two business days of acceptance. 

How can I find a HUD home?

Click here to link to the HUD website.

What is Owner Occupant Period?

Priority is given to Purchasers who are Owner-Occupants for the first ten (10) calendar days after a new listing is posted.  All bids are opened on the 11th day for all owner/occupant bids and all bids are considered as though they were received simultaneously. 

When can an Investor submit a Bid?

After Day 10, if a property remains unsold.  If there are no acceptable owner-occupant bids on Day 11, then bids are opened daily from all purchasers, with no priority given to owner/occupants. 

Bids are opened the following business day for review and acceptance and results are posted on this website.  Bids placed on the weekend or Holidays are opened the following business day.

How do I get access to the property?

Contact Mission Country Properties at 805-467-3950

Can I submit more than one bid for different properties?

If an Owner Occupant submits multiple bids for different properties PEMCO will select and award the bid that has the highest acceptable Net to HUD for that property. 

What is FHA financing? 

There are three main types of FHA Financing.  More information may be obtained from any mortgage company familiar with FHA Guidelines for the various programs.

(1)                 203(b) Regular FHA Loan - Listed as “IN”

If the Property does not have any mandatory repairs FHA will insure the Loan hence the classification of “IN”

(2)                 203((b) - Repair Escrow - Listed as “IE”

·         When a property has less than $5000 in repairs to bring it up to Minimum Property Standards, FHA will insure the loan provided the repairs are completed by the Buyer or the Buyer’s agent within 90 days from the date of Closing.

·         It is a cost to the Buyer that the Buyer can finance and add the amount to the mortgage.

·         The Lender monitors and keeps the funds in an escrow account for disbursement on completion of repairs to the Lender’s satisfaction.          

(3)                 203(k) - Rehab Loan - Listed as “203K ”

·         When the property has more than $5000 in Minimum Property Standards repairs to be done

·         The Lender must obtain an Inspection report from an approved 203(k) consultant and a new appraisal

How is the repair escrow amount determined? 

The FHA appraiser lists the estimated cost of repairs needed to bring the property up to minimum FHA standards. This amount is then multiplied by 110% and this amount is listed as the repair escrow amount. Example: if repairs total 1,000.00 x 110% = 1,100.00. The Repair Escrow amount will be listed at $1,100.00.

How do I determine the mortgage amount when there is a repair escrow? 

The DE Underwriter will determine the final 203(b) mortgage amount.  The DE Underwriter will take into account the repair escrow amount to determine the FHA loan amount.  Brokers should not fill in line 4 of the sales contract.  The DE underwriter will determine this amount.  

What is Bid Results?

Bid Results – whenever a bid is accepted, the results are posted on our website under “Bid Results” the same day.  By checking the Bid Results, the buyer’s agents will then know to deliver the complete sales contract package within two business days or 48 hours of acceptance to the designated M&M Contract office. 

What is Bid Statistics?

Bid Statistics – information on what bids were received and whether they were acceptable

are a snapshot of all the bids submitted for a particular property irrespective of the fact if the bid was accepted or not.  Bid statistics are updated every Friday for all bids submitted the previous week and will continue to display for 60 days. 

Why do I have to get a Pre-Qualification Letter before I bid?

A Pre-Qualification Letter must be obtained prior to bidding on a property.  This is to avoid having to tie up the property with a transaction that is unlikely to close.  The Pre-Qualification letter must be directly from the lender (NOT the mortgage broker) giving a current date and an amount of the loan that is acceptable.   It should also include the name the buyer(s) whose credit report was reviewed and approved by the lender.

How long do I have to close?  What if I need more time?

Sales transactions shall close within the timeframe as specified on your state/regional Forfeiture and Extension Policy (Addendum) Version 2/15/05.  Closing timeframes are: (Northern California=45 days), (Southern California=45 days), (Hawaii, Guam, Northern Marianas=60 days).  Properties may close in less than the timeframe specified.  However, the amount of days specified above for your state/regional area MUST be entered on the HUD Sales Contract. If closing does not occur within the timeframe then extension fees will apply.  The Broker must submit a written request for an extension regardless of the reason for the delay in closing.  The Extension Request Form can be found in the forms section of this website and must be accompanied by the extension fee.  PEMCO will grant extension requests on a case-by-case basis. 

Does HUD have special programs for Non-Profits and Local Government Agencies?

Another one of HUD’s Special Sales Program under the Good Neighbor Initiatives is the Direct Sales to Non-Profit Organizations and Government Agencies.  This special sales program under which approved non-profit organizations and government agencies may purchase properties at discounted prices for use in local housing or homeless programs.  More information on this program can be found at http://www.hud.gov/offices/hsg/sfh/reo/goodn/main.cfm 

Is there anything else I should know about HUD Homes?

More information is available on HUD’s website:  www.hud.gov/offices/hsg/sfh/reo/reobuyfaq.cfm

Houses built before 1978 may have lead-based paint which can cause harm to your family; so be sure to read about this hazard and about what you would need to do to correct it.