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   HUD FAQs for Realtors

Recent changes in the way HUD markets HUD Homes have buyers and selling brokers/agents scratching their heads with many questions. As a HUD approved listing broker, Envision It Sold, Inc is pleased to offer training to answer your questions and assure that your HUD Home buying and selling experience goes as smoothly as possible.

   What is a HUD Home?

A HUD home is a 1-to-4 unit residential property acquired by HUD as a result of a foreclosure action on an FHA-insured mortgage. HUD becomes the property owner and offers it for sale to recover the loss on the foreclosure claim.

   Who can sell HUD homes?

Any licensed real estate agent or broker who is registered with HUD may sell HUD Homes.

   How do I register to sell HUD homes?

The Principal Broker (designated broker) for your company or office must register by completing SAMS (Single-Family Acquired Asset Management System) forms 1111 and 1111A, and attachments. All forms must be signed by the designated broker. Registration must be renewed annually using the same forms to maintain current status. Please allow 6 to 8 weeks for processing.

   How long does it take to get registered with HUD to buy and sell HUD homes?

The approval process runs about 8 Ė 12 weeks.Also, no notification is sent out once the application is approved by HUD. The only way to know whether or not someone has been approved is to check oneís NAID status on our website regularly.

   What is an NAID number?

An NAID number is a Name Address Identification Number issued by HUD. This number allows the agents and brokers to submit bids on behalf of prospective buyers of HUD homes.

   How do I search for HUD homes?

All HUD Homes are now posted for sale on Prospective buyers must use a HUD registered broker/agent to "bid" on a HUD Home. The bid that results in the highest "NET" proceeds to HUD will be the successful bidder. There are specific bidding periods for various types of buyers (see the property details page for the bidding periods and deadlines).

   Do I still use my HUD key to access all HUD homes?

No. Per HUD's directive, in order to cut down on vandalism, the Field Service Managers (FSMs) will now be changing key codes which will be specific to each state. These key codes will be changing every 6 months. All HUD homes are now accessed through lockboxes. Be sure to contact the showing number shown on the MLS listing for lockbox codes before showing.

   Where do I submit an offer for a HUD home?

You will submit your offer at and you will fill out HUDs purchase contracts, not your state approved purchase contracts.

   When are bids opened?

The asset manager can open and accept bids on the Bid Open Date. The date and time that this can occur is shown on the Property Details screen. Bid Open dates vary according to the type of listing period that the property is currently in.

   When can an Investor submit a Bid?

When a HUD property is first listed for sale to the general public, bids can only be submitted by Owner Occupant Purchasers. All bids placed by Owner Occupants that are submitted during this priority period are considered to have been received as though they were received simultaneously. If there are no acceptable owner-occupant bids on the last day of the Exclusive 30 day period, then bidding becomes available to investors on a daily basis, with no priority given to owner/occupant bids.

   What are the different bid statuses?

AC: Accepted - The AM has ACCEPTED your bid. Please ensure that all documentation is in order and has been sent to the AM for review. Failure to do so in a timely manner may result in your bid being canceled.

CA: Canceled - Your bid was canceled by the AM.

OBC: Other Bid under Contract - Your bid was NOT selected. The AM entered into a Sales Contract on another bid. If you elected your bid to be a backup, your bid will be saved for future consideration in case the contract gets canceled.

OBS: Other Bid Selected - This bid has NOT been selected. The AM has a preliminary contract acceptance from a different bidder for this property. If you elected your bid to be a backup, your bid will be saved for future consideration.

PR: Pending Review - Your sealed bid is Pending Review and is not currently available to the AM. You cannot modify or withdraw this bid. Bids from a previous bid-opening date are still under review. The AM does not have any additional information at this time.

SB: Sealed Bid - Your bid is sealed and is not available to the AM. You can modify or withdraw the bid.

UR: Under Review - The AM is currently reviewing your bid and others from this bid-opening date.

WI: Withdrawn - You withdrew your bid from consideration before the AM reviewed the bid..

   How are HUD Homes priced?

The initial list price for all HUD homes is based on a current "AS IS" FHA appraisal.  If market conditions change over time before the home sells, HUD may choose to lower the list price below the appraised value.

   Will HUD pay for any repairs?

No.  All HUD Homes are sold AS IS.  HUD does not warrant the condition of its properties and will not pay for the correction of defects or repairs. Since the new owner will be responsible for making needed repairs, HUD strongly urges every potential homebuyer to get a professional inspection prior to submitting an offer to purchase.  One option to deal with repair issues is a 203K FHA loan - ask you lender or real estate professional for more info and/or click HERE.

   Can I increase my chances to be the winning bidder if I bid over the list price?

The winning bid will be the bid that yields the highest "NET" to HUD, so the more you bid, the better you chances.  However, HUD will not allow you to finance any amount over the initial list price (applicable to FHA financing).  If your winning bid is over the initial list price, you will have to pay the overage at closing.

   Will HUD pay for any closing costs and selling agent's commission?

HUD allows up to 3% Real Estate Commission. Although HUD may pay for these costs, keep in mind that the higher the closing cost and commission will reduce your Net to HUD and may affect your competitive bidding ratio. For more information, ask your real estate agent or the listing broker. HUD will allow to be deducted from its proceeds, purchaser financing and closing costs that are considered to be reasonable and customary in the jurisdiction where the property is located. In no event may these costs exceed 3% of the property's gross purchase price. Please reference HUD Notice H2006-12 for additional information. Please refer to page 2 of your state/regional Forfeiture and Extension Policy for a list of the closing costs that will automatically be paid by HUD and other closing costs that may be paid by HUD.

   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 Underwriter will determine the final 203(b) mortgage amount. The Underwriter will take into account the repair escrow amount to determine the FHA loan amount. The underwriter will determine this amount. Please remember that the repair escrow amount needs to be filled in only if the buyer is using 203(b) repair escrow financing.

   What if my offer price is higher than the appraised value?

FHA guidelines will limit the underwriter to insuring the loan for the lower of two values; the offer price or the appraised value (displayed as the As-Is Value). If your offer price is higher than the appraised value, the FHA underwriter will require that your buyer(s) cover the overbid amount with a cash deposit. The buyer(s) will not be allowed to build the overbid amount into an FHA loan.

HUDís mortgagee letter 2000-27 will require that the FHA UW use the appraisal obtained by HUD. This mortgagee letter instructs the FHA Underwriter NOT to obtain a new appraisal; nor can the FHA Underwriter request that new comps be pulled and the HUD appraisal updated.

If your offer price is higher than the appraised value and tentative acceptance is extended to you, the options available to you are:

1. Proceed with contract execution. HUD will require that the selling broker verify that the cash reserves are available to cover the overbid amount before we execute the contract.

2. Use cash or conventional financing. All of the guidelines outlined above apply to FHA financing only. A conventional lender will have their own set of guidelines not governed by HUD.

3. Cancel prior to contract execution. If there is an acceptable backup, we will award tentative acceptance to the backup offer. If there are no acceptable backup offers, the property will be relisted

   How can I see the status of bids for the property I made an offer on?

All HUD Homes are now posted for sale on Prospective buyers must use a HUD registered broker/agent to "bid" on a HUD Home. The bid that results in the highest "NET" proceeds to HUD will be the successful bidder. There are specific bidding periods for various types of buyers (see the property details page for the bidding periods and deadlines).

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

Law enforcement officers, teachers and firefighters/emergency medical technicians can contribute to community revitalization while becoming homeowners through HUD's Good Neighbor Next Door Sales Program at a 50% discount off of asking price.

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 HERE.

   Where can I learn more about HUD Homes?

Click HERE to visit HUD's website

Click HERE for HUD Home Store FAQs


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