Frequently Asked Questions
Regarding HUD Properties

Read the following, and if applied, it is a sure fire way to put in
a winning offer on these homes

The primary housing and lending regulatory authority in the United States is known as “HUD”, the U.S. Department of Housing and Urban Development. Among many other things, HUD is responsible for the operations of the Federal Housing Administration (FHA), which is the agency that insures mortgage lenders against loss on FHA home loans. When FHA borrowers default on their obligation, the lender initiates the foreclosure process. HUD becomes the owner of the properties after foreclosure is completed and after the lender has made a claim against the FHA insurance fund for payment of the remaining balance of the loan. HUD wants to sell the property as quickly as possible and recover as much of the claim amount as it can to replenish the FHA insurance fund. Since 1999, HUD has hired Management and Marketing (M&M) Contractors to maintain and sell the HUD-owned single family residential properties (1 to 4 units). These M&M Contractors, following HUD guidelines, are responsible for all aspects of property care and resale on behalf of HUD.

The following information is provided as an introduction to the process through which HUD homes can be purchased.

FAQs for Buyers

Who Can Buy a HUD Home?

Should I Get a Home Inspection?

What About Financing?

I'm interested in an FHA mortgage. Who do I see?

How do I know if I qualify for a mortgage?

I want to buy a home, but I don’t have much money. Can HUD help me?

Does FHA Offer Any Special Discount Sales Programs?

What are the HUD Special Programs?

How can I find out if I'm eligible for one of the special programs?

Will HUD pay my closing costs?

Where Can I Learn About Available HUD Properties?

Additional Information About HUD Homes and Other FHA Programs

I'm thinking about buying a home, but I don't really know if it's a good idea for me. Who can I talk to?

Where do I Find HUD Listings?

What Do The HUD Listing Types Mean?

What are the listing periods?

Where do I go if I have questions about a property?

I am an investor. When can I bid on a HUD property?

Do I need an agent to make an offer?

What is Required Earnest Money Deposit?

What is required downpayment?

Bid Opening, Review and Results

Forfeiture of Earnest Money Policy

Closing Time Frame

Closing Extension Policy

FAQs for Agents

How do I obtain a NAID?

Why an agent has to register as a bidder?

How do I keep track of offers I make for clients?

What is the Bid Amount?

What is a Bid Open Date?

When are bids opened?

How will I know who is the asset manager for a particular property?

What forms do I need to submit with an offer?

What do I do if an offer has been counteroffered?

Can I cancel an offer after it has been submitted?

How do I find out if an offer has been accepted?

What do I do if an offer has been accepted?

How much commission compensation will I receive?

I have more questions? What should I do?

Who Can Buy a HUD Home?

Almost anyone! If you have the cash or can qualify for a loan (subject to certain restrictions) you may buy a HUD Home regardless of your race, color, religion, sex, national origin, handicap, or familial status (certain restrictions apply to HUD employees and to anyone associated with the M&M Contractors). HUD Homes are initially offered to owner-occupant purchasers (people who are buying the home as their primary residence). Following the priority period for owner occupants, unsold properties are available to all buyers, including investors.

If you are an
evacuee displaced by Hurricane Katrina, Rita or Wilma
, you may be eligible to purchase a HUD Home at a discounted price.

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Should I Get a Home Inspection?

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.

If you are interested in acquiring a HUD Home that is in need of repair, you may be interested in applying for an FHA 203(k) Rehabilitation Loan. When a homebuyer wants to purchase a house in need of repair or modernization, the homebuyer usually has to obtain financing first to purchase the dwelling; additional financing to do the rehabilitation construction; and a permanent mortgage when the work is completed to pay off the interim loans with a permanent mortgage. Often the interim financing (the acquisition and construction loans) involves relatively high interest rates and short amortization periods. The Section 203(k) program was designed to address this situation. The borrower can get just one mortgage loan, at a long-term fixed (or adjustable) rate, to finance both the acquisition and the rehabilitation of the property. Click here for more information about FHA's 203(k) Rehabilitation Loan Program.

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What About Financing?

HUD does not provide direct financing to buyers of HUD Homes. Buyers must obtain financing through either their own cash reserves or a mortgage lender. If you have the necessary available cash or can qualify for a loan (subject to certain restrictions) you may buy a HUD Home. While HUD does not provide direct financing for the purchase of a HUD Home, it may be possible for you to qualify for an FHA-insured mortgage to finance the purchase.

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I'm interested in an FHA mortgage. Who do I see?

You'll need to go see a HUD-approved lender

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How do I know if I qualify for a mortgage?

There are many different kinds of mortgages available, and qualification requirements vary. The best thing for you to do is shop around - talk to two or three local lenders to find out what kinds of mortgages they have available that could fit your situation. There are a number of mortgage calculators online that can give you some idea about your ability to qualify for a mortgage. HUD offers a good calculator, in our "homebuyers kit". You also might want to contact a housing counseling agency. They may be able to direct you to the kinds of mortgage programs that might fit your needs.

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I want to buy a home, but I don’t have much money. Can HUD help me?

Helping people become homeowners is one of the most important thing HUD does. Here are some suggestions:

1. Start by reading our "homebuyer's kit" - particularly the part about the federal mortgage programs that can help people buy homes. HUD's FHA has many mortgage insurance programs that can help first-time homebuyers. Also, be sure to read about buying a HUD home - they can be very good deals!

2. Contact one of the HUD-approved housing counseling agencies. They can help you sort through your options.

3. Call your local office of housing and community development or your mayor's office to see if there are any local home buying programs that could help you.

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Does FHA Offer Any Special Discount Sales Programs?

FHA REO properties located in designated Revitalization Areas are available at a reduced sales price to law enforcement officers, teachers, firefighters, emergency medical technicians, nonprofits and local governments. Read more about these Good Neighbor Initiatives.

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What are the HUD Special Programs?

Good Neighbor Next Door: HUD's Good Neighbor Next Door initiative is designed to encourage renewal of revitalization areas by providing an opportunity for law enforcement officers, firefighters, emergency medical technicians and teachers to purchase homes in these communities. HUD provides a substantial incentive in the form of a 50% discount off the list price of eligible properties.
See
http://www.hud.gov/offices/hsg/sfh/reo/goodn/gnndabot.cfm for more information.

Dollar Homes: HUD's Dollar Homes initiative helps local governments to address specific community needs by offering low to moderate income families the opportunity to purchase qualified HUD-owned homes for $1 each.
See
http://www.hud.gov/offices/hsg/sfh/np/np_home.cfm for more information.

Nonprofit: The Federal Housing Administration (FHA) offers community and faith based nonprofit organizations the opportunity to purchase HUD homes at discounts up to 30%. With this discount, local nonprofit organizations invest in their communities through property rehabilitation and resell to first-time homebuyers and low to moderate income families.
See
http://www.hud.gov/offices/hsg/sfh/reo/goodn/dhmabout.cfm for more information.

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How can I find out if I'm eligible for one of the special programs?

Contact your local HUD office. If you need contact information, call 1-800-CALL-FHA (1-800-225-5342)

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Will HUD pay my closing costs?

HUD pays certain Closing Costs up to 3% of the purchase price, IF inserted of line 5 of the sales contract when the electronic bid is submitted. Click here to view HUD Notice H-2009-17 explaining which closing costs are allowable and the maximum amount in your appropriate State.

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Where Can I Learn About Available HUD Properties?

Any single family property acquired by HUD FHA will display a sign identifying who is managing the property before it is listed for sale. During this time the property is appraised, title issues are resolved, if necessary, and a determination is made about the property's eligibility for HUD's discount sales programs. Property listings are posted on HUD Home Store. For more information, contact the Management and Marketing Contractor serving your area.

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Additional Information About HUD Homes and Other FHA Programs

If you have more questions about the sale and purchase of FHA-insured homes, contact the Management and Marketing Contractor that manages the FHA housing portfolio in your community. You may also log onto the FHA Resource Center for more information about FHA and its various programs.

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I'm thinking about buying a home, but I don't really know if it's a good idea for me. Who can I talk to?

There are HUD-approved housing counseling agencies that can help you decide whether buying a home is right for you. Contact one in your area.

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Where do I Find HUD Listings?

Listings describing HUD homes that are ready and available for sale are posted online on HUD Website.

You can search for all the HUD properties in a state by clicking on the state on the map or selecting it from the list.

You can type in part of the street address, or part of any of the other text fields. The system will select all properties that contain in the corresponding fields the letters or numbers that you type in.

You can also search by a price range, number of bedrooms or bathrooms, buyer type, or property status.

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What Do The HUD Listing Types Mean?

There are three (3) listing types, as described below, that indicate the best FHA financing for the property, based on its overall condition and other relevant factors. With each display listing on our website, there are pictures of the property; the FHA appraised value is given; there is a Property Condition Report (PCR) that discloses any known information about the property; and a Lead-Based Paint (LBP) Report and the appropriate LBP Addendum is included.

1. IN or Insurable Listings

These properties are in sufficiently good condition to qualify to be the collateral for an FHA 203(b) loan. This is the most common and simplest type of FHA loan.

2. “IE or Insurable-Escrow Listings

There is a repair escrow established using extra funds borrowed by the purchaser from the FHA lender to enable these properties to be eligible for an FHA 203(b) loan. The house will have up to $5,500 worth of repairs (including a 10% contingency) made within ninety (90) days or less after closing to meet “Minimum Property Standards” (MPS). The purchaser closes, and then must use the money in the escrow account that the lender has added to the loan amount to have the specific MPS repairs made that are required to bring the property up to good enough condition to be the collateral for the loan. The amount of the escrow is based on the M&M Contractor’s estimate of costs to repair, and is reflected in the property listing on the web site along with the items requiring repairs. Any funds in the escrow account that are left over after the lender has made an inspection to be sure the repairs are complete may reduce the principle balance of the loan, or with lender approval, may be used to make additional improvements to the house. Note that if a buyer for an IE listing does not use FHA financing, no repair escrow will be made available.

3. “UI or Uninsurable Listings

When a property needs more than $5,500 worth of repairs, or if the purchaser wishes to make more extensive renovations, FHA 203(k) financing is often appropriate. In these cases, the FHA-approved appraiser’s value is the “as is” amount and the purchaser gets estimates from contractors for the renovations. The lender then gets an “as repaired” appraisal based upon the cost estimates supplied by the purchaser’s contractors. If the house will be worth the total of the “as is” value and the costs to rehabilitate or renovate, then the FHA 203(k) lender can make one loan that will include both the acquisition and the rehabilitation money, assuming the buyer/borrower qualifies to repay that amount of a loan. Knowing a good FHA lender with 203(k) experience is essential for this type of sale. Explore the advantages of the “streamlined” 203(k).

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What are the listing periods?

New listings are available daily.
During the Exclusive Listing Period, bids may be submitted only by Owner Occupant purchasers, which HUD defines as owner-occupant purchasers, qualified nonprofit organizations and government entities. There will be:

  • a thirty (30) day Exclusive Listing Period for Owner Occupant purchasers for properties listed Insurable and Insurable with Escrow Repairs,
  • a five (5) day Exclusive Listing Period for Owner Occupant purchasers for properties listed Uninsured.
Exlusive Listing Period (Owner Occupant Priority).
  • For Insurable and Insurable With Escrow properties, bids shall be opened and reviewed on the fifteenth (15th) day of the Exclusive Listing Period. All bids will be treated as having been received simultaneously. If no winning bid is received by the fifteenth (15th) day, bids shall be opened and reviewed on each day after the fifteenth (15th) day up to the thirtieth (30th) day, or until a winning bid is received. If no winning bid is received in that thirty (30) day period, the listing shall be extended to all buyers. See Extended Listing Period below.
  • For Uninsurable properties, bids shall be opened and reviewed on the sixth (6th) day. All bids will be treated as having been received simultaneously. If no acceptable Owner Occupant net bid is received, the listing shall be extended to all buyers. See Extended Listing Period below.
Extended Listing Period.
At the conclusion of the Exclusive Listing Period, should a property remain unsold, all general public bids (including Investors) may be submitted daily.

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Where do I go if I have questions about a property?

Contact the Listing or Selling Agent, or the Asset Manager for the property. You can find contact information by clicking the Property Case number, then clicking the Agent Info tab. The HUD Homestore Help Desk cannot answer questions about individual properties and will refer you back to the Agent Information.

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I am an investor. When can I bid on a HUD property?

During the exclusive listing period, bids may be submitted by Owner Occupants. At the conclusion of this exclusive listing priority period all general public bids will be accepted.

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Do I need an agent to make an offer?

You cannot put in an offer on a HUD Home by yourself. You must use a Selling Broker who is licensed to sell HUD Homes to represent you, or you can go through the Listing Broker for the home. Only brokerages with a NAID number can submit bids on HUD homes. Agents should check with their brokers to see if they have a NAID number.

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What is Required Earnest Money Deposit?

Earnest Money Deposit must be in the form of a cashier's check, money order, or other certified funds made payable to the U.S. Department of Housing and Urban Development. The original Earnest Money check should be submitted with the sales contract after bid acceptance. The Earnest Money deposit will be sent to the Closing Agent after contract execution.

  • $1,000 for offers greater than $50,000,
  • $500 for offers $50,000 or less,
  • 50% of the Listing Price for Vacant Lots

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What is required downpayment?

Owner Occupants Only:
3.5% Minimum Down payment for FHA financed properties.
Maximum mortgage amount 96.5% of the appraised value or sales price whichever is lower.
Investors:
1 unit: 25% Minimum Down payment, for FHA financed properties;
2 to 4 units: 15% Minimum Down payment, for FHA financed properties.

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Bid Opening, Review and Results

In order to be valid for bid opening on a specific day, bids must be completed and confirmed on the Internet no later than 11:59 p.m. on the previous day. Bids received on the same day shall be considered to have been received simultaneously. Friday, Saturday and Sunday bids will be considered to have been received simultaneously and will be reviewed simultaneously on the following Monday.

Bids will be opened and reviewed each business day. The highest acceptable net bid to HUD will be selected. Results will be posted each business day by 1:00 p.m.

REMINDER: Brokers must check the HUD Listings website on a daily basis for available properties and Bid Result Publication. If your bid is selected, Brokers must submit the original written and completed HUD Sales Contract along with the required Addenda to the appropriate office 0f M&M Contractor within the next 48 hours of Bid Result Publication otherwise the bid will be considered canceled and the second highest acceptable net bid to HUD will be considered. To be acceptable, hard copies must contain no errors.

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Forfeiture of Earnest Money Policy

All HUD Property Disposition sales of HUD-acquired properties are to close within 45 days of acceptance of a HUD-9548 Sales Contract offer to purchase.
Forfeiture of Earnest Money Deposits:
The failure by a Purchaser to close on the sale of property within the allowable time period, including any extensions granted by HUD, will result in the forfeiture of the earnest money deposit, except where special circumstances exist and are documented and accepted by HUD.
Investor Purchasers:

  • Uninsured Sales – The purchaser will forfeit 100% of the earnest money deposit for failure to close, regardless of reason.
  • Insured Sales – The purchaser will forfeit 50% of the earnest money deposit for failure to close if purchaser is determined by HUD or Direct Endorsement underwriter to be an unacceptable buyer. The purchaser will forfeit 100% of the earnest money deposit if the sale fails to close for any other reason.
Owner-Occupant Purchasers:
  • The purchaser will have 100% refund of the earnest money deposit under the following circumstances:
    1. There has been a death in the immediate family (contract holder, spouse, or children living in the same household);
    2. There has been a recent serious illness in the immediate family that has resulted in significant medical expenses or substantial loss of income, thus adversely affecting the purchaser’s financial ability to close the sale;
    3. There has been a loss of job by one of the primary breadwinners, or substantial loss of income through no fault of the purchaser;
    4. On an insured sale, HUD or a Direct Endorsement underwriter determines that the purchaser is not an acceptable borrower;
    5. On an uninsured sale, the purchaser was pre-approved for mortgage financing in an appropriate amount by a recognized mortgage lender and, despite good faith efforts, is unable to obtain mortgage financing. “Preapproved” means a loan commitment has been obtained from a recognized mortgage lender for mortgage financing in a specific dollar amount sufficient to purchase the property; and
    6. For other good cause, as determined by the field office.
  • On an uninsured sale, the purchaser will forfeit 50% of the earnest money deposit where, despite good faith efforts by the purchaser, there is an inability to obtain a mortgage loan from a recognized mortgage lender.
  • On either type of sale, the purchaser will forfeit 100% of the earnest money deposit in those instances where no documentation is submitted, where the documentation fails to provide an acceptable cause for the buyer’s failure to close, or where documentation must be received by M&M Contractors no later than close of business on the tenth day following cancellation of contract.

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Closing Time Frame

All purchasers must close on or before forty five (45) days of contract acceptance date.

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Closing Extension Policy

ALL SALES ARE EXPECTED TO CLOSE WITHIN THE APPLICABLE TIME FRAME IDENTIFIED ON LINE 9 OF THE SALES CONTRACT.
If the closing does not occur on or before the specified date on line 9 of the HUD Sales Contract 9548, the HUD Broker should contact HUD's Closing Agent no later than FIVE days prior to the contract expiration date and request an extension. M&M Contractor, as HUD's Representative, may grant an extension of closing time and, if approved, each extension will be for a period of fifteen (15) days as follows:

  • The initial 15-day extension will be provided for owner occupant purchasers, at no cost, only if documentation is provided indicating that proper and timely loan application was made, that the delayed closing is not the fault of the purchaser and that mortgage approval is imminent.
  • Documentation submitted with the extension request must establish that a closing can reasonably be expected to occur within the extension period.
  • Extension fee’s that do not qualify for waiver will be charged as follows for a period of fifteen (15) day increments:
Contract Sales Price Extension Fee
Equal to or less than $25,000.00 $150.00 ($10.00 per day)
$25,000.01 to $50,000.00 $225.00 ($15.00 per day)
$50,000.01 and over $375.00 ($25.00 per day)
  • Extension fee checks are to be either Money Order or Bank Certified, Personal checks and Cash are not acceptable. Funds are to be made payable to HUD and delivered to HUD’s Designated Closing agent along with the attached closing extension request and all necessary backup as described above.
  • Extension fees are non-refundable however, if closing occurs in less than the approved extension time, the buyer will be credited at closing for the per day fee for the unused portion of time.
  • The approval of an extension does not obligate M&M Contractor, as HUD's Representative, to grant future extensions.

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How do I obtain a NAID?

You can find the documents to apply for a NAID on HUDHomestore.com using the NAID Registration link. When you have completed the application process, you will be issued a NAID. Once you have obtained a NAID, you can register at HUDHomestore.com and create a user name and password login. If you are a Selling Agent, your principal broker must be registered before you can register. This NAID registration permits you to make an offer on a HUD property and proceed to the sale closing.

To obtain a NAID:

1. Click the NAID Registration link.

2. Click the Bidder Application link and complete the form.

3. Click the Selling Broker Certification link and complete the form.

4. Find the correct address for your state's Homeownership Center, and mail the forms.

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Why an agent has to register as a bidder?

HUD requires each selling broker/agent (as well as nonprofits and government agencies) to register as a bidder so HUD can confirm that you are using a valid NAID and to authenticate your identity. Only valid bidders are permitted to make offers on HUDHomestore.com.

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How do I keep track of offers I make for clients?

Once you submit an offer you can check the status of your offer by logging in to HUDHomestore.com. On the Review Your Bids page you can search for a specific offer or view a list of all of your current offers. You can only view bids that you have submitted.

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What is the Bid Amount?

The Bid Amount is the sale price for the property. It is a fair market value based on a recent appraisal. You can make an offer under or over the sale price. HUDHomestore.com will select a winning bid based on the offer that gives the highest net to HUD.

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What is a Bid Open Date?

The Bid Open Date is the date on which the asset manager can open, and accept or reject bids.

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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.

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How will I know who is the asset manager for a particular property?

It can be found on “Agent Info” tab of the property on HUDHomeStore.com site.

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What forms do I need to submit with an offer?

All required forms can be found on “Addendums” tab of the property. These are possible forms that might be required:
General Forms:

  • Fillable HUD Sales Contract Form 9548 Revision (1/99)
  • General Addendum to HUD Sales Contract
  • Notice to Purchaser Addendum
  • For Your Protection: Get a Home Inspection
  • Certification of Owner-Occupant
  • Radon Gas and Mold Notice and Release Agreement
  • 203(k) Rehabilitation Financing Lead Agreement
Special Forms
  • GNND Personal Information Questionnaire form HUD-9549
  • GNND Officer Pre-Qualification Questionnaire form HUD-9549-A
  • GNND Teacher Pre-Qualification Questionnaire form HUD-9549-B
  • GNND Firefighter/Emergency Responder Pre-Qualification Questionnaire form HUD-9549-C
  • Discount Sales Addendum form HUD-9548-B
  • GNND Eligibility Certification form HUD 9548-D
  • GNND Employer Verification form HUD 9548-E
Certification of Owner-Occupant Status for Cash Purchases: All bids by owner-occupants, who are purchasing properties listed in the owner-occupant category, must include an Owner-Occupant Certification. Sanctions will be immediately imposed upon Brokers, Agents and Investors found to be abusing the system.

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What do I do if an offer has been counteroffered?

As a bidder, you can review all HUD initiated counteroffers by selecting the Counteroffer search criteria to 'Yes' on Review your Bids. Also, if you have been notified that there has been a counteroffer, your original bid will have been cancelled. Go to the Review Your Bids screen, and locate the bid. Click the Property Case number link to view the Property Details screen. You will then see a link that you can use to respond to the counteroffer.

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Can I cancel an offer after it has been submitted?

Yes you can cancel an offer after it has been submitted, until the bid opening date. Log in to HUDHomestore.com, click Bidder Functions, and go to Review your Bids. Click the bid you want to cancel. Click the Withdraw this Bid button. A summary screen will appear, and you will again have to click the Withdraw this Bid. The bid is then withdrawn from consideration by HUD. You will not be able to cancel an offer after the bid opening date has passed!!

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How do I find out if an offer has been accepted?

It remains the responsibility of the bidder to review the status of all submitted bids on HUDHomestore.com. On the Review your Bids screen, you can filter to find all accepted bids. Automated emails are generated from the system as a courtesy but should not be relied upon for notification of accepted bids.

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What do I do if an offer has been accepted?

If your offer has been accepted, you are required to deliver the signed contract and all addenda to the asset manager within two (2) business days.

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How much commission compensation will I receive?

The real estate commission will be shared on a 50/50 % basis with the listing broker based on the percentage stated in the offer.

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Lynn Horner Baker - HORNER BAKER PARTNERS 111 Village Parkway, Bldg 2, Suite 201, Marietta, GA 30067
Phone:770-579-4060 Fax: 770-988-0363
sold@LynnHornerBaker.com

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