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Foreclosure by H.U.D.

Purchasing a H.U.D. foreclosure can be a challenging experience.  True some of the deals they offer are amazing but interacting with H.U.D. asset managers can be frustrating.  When one brings bank financing into the picture the experience can be downright maddening.

H.U.D. requires a two-step process to contract on one of their homes.  First is the electronic bid, the buyer and their duly registered broker fill in an electronic bid on the desired H.U.D. home.  Buyers will need to provide their social security numbers.  If one is not comfortable sending one’s data into the nethersphere of the internet, then purchasing a H.U.D. home is not for you.

Once a bid is accepted then agent and buyer have 48 hours to get an official, one page H.U.D. contract with earnest money, proof of funds to close, pre-approval letter to the asset manager.  Asset manager= some random firm in some random city which has pleased the H.U.D. gods and is allowed to review paperwork.  Here’s where it can gets dicey.

If the asset manager is reasonable your contract might glide right through.  If the asset manager understands the H.U.D. system; that bouncing paperwork back for the tiniest of reasons; ie: missing hyphens, un-dotted “I’s”, un-crossed “t’s” means job security then there is a challenge.  Job security= paperwork bounces around= home is not sold= 48 hours expires= bids must be resubmitted= 48 hours to submit contract= house not sold and on and on.  This is typical, this is their norm, remember the asset manager is a contractor so there is security in un-sold homes. There are dollars too…BIG dollars.

So, let’s suppose you get through this maize.  You have a contract…good for you.  Now you must set up financing.  Be prepared to solicit from yet another vendor, in another random city permission to turn the power to your new home on.  The cost $150 non-refundable, certified bank dollars, this fee is to re-winterize your new home and…drum roll…the power can only be on for 72 hours.  In that timeline the bank appraisal must occur, banks require power on to appraise a home and the home inspection must occur in that 72 hours too.  Pray…that there are no issues requiring an engineer. Re-winterization is required between October and April, even if you’re in sunny warm climates. The rules are the rules are the rules.

The home stretch hurdle…H.U.D. must have a closing settlement statement FIVE days, FIVE business days prior to closing in order to approve that statement.  This is insane and in the private sector, well it never, ever happens. Here are some other H.U.D. peccadillos; H.U.D. does not allow any scratch outs or white outs on their contract, make an error, start over. H.U.D. does not accept faxed contracts or emailed contracts.  H.U.D. does not accept electronic signatures. Some H.U.D. asset managers allow agents to sign certain parts of the various addenda to the contract others require the agent’s broker in charge to sign everything.  Be aware of evenings, holidays, vacations and other time off because your agent’s broker might need to be intimately involved.

And then, as happened with me; a H.U.D. asset manager emailed me the wrong contract, complete with some stranger’s social security number and they thought nothing of it.  Concerned? See paragraph two. The take away, pray and be patient before entering into a H.U.D. transaction.

Want to buy a HUD home…call or email me…919-608-2372 or MSullivan@fmrealty.com

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