2) Insurable with repair escrow
property (IE),
An insurable property with a repair
escrow refers to a home that is also eligible for a 203(b)
mortgage with a repair escrow. It is important to note
that the buyer must accept the repair escrow and should
add the amount of the repairs to the offer price IF
he or she is financing the purchase with an FHA 203(b)
loan.
The repair escrow is an account
established upon the closing of the purchase of the home
for the amount of the repairs on the property. It is the
lender’s responsibility to inspect and distribute the
monies as necessary within 30 days of the close of escrow.
These costs and repairs are included in the buyer’s loan
amount and become part of the monthly house payment.
Offers from buyers with other-than-FHA financing such as
VA loans, conventional mortgages or cash buyers are also
acceptable for this type of property.
These properties may sell for a
discount from market price due to the repairs needed.
However, these properties may not be available for
financing through Conventional Lenders due to the repair
escrow. Also, not e that HUD DOES NOT allow
repairs to be made prior to closing without written
consent. Doing so could void one contract
3) Uninsurable property (UI).
An uninsurable property are homes
generally needing extensive repairs and deemed by HUD as
not eligible for FHA insurance in their as-is condition.
Other-than-FHA financing is required. However, HUD will
permit the purchase of certain properties with FHA
203k loan financing (rehab mortgage where a lender may
finance the repairs of the home into the mortgage).
These properties sell for the largest
discount. Most of these homes are sold as "all cash"
offers or through FHA 203k loan financing. These homes are
generally not available for financing through conventional
or VA financing due to their poor condition.
When a HUD foreclosure is first listed, bids
are accepted
within the first 10 days are restricted to owner-occupied
buyers only. Owner-occupied buyers may make a bid within the
first 5 days. HUD will generally award the home to the bidder
with the highest acceptable net amount to
HUD.
If there are no acceptable offers to HUD
within the first 5 days, the bidding process on the home will
be opened up on a daily basis for a period of no more than 5
additional days. At the end of each day within this time
frame, HUD may select the highest acceptable net
owner-occupied offer. This does not include weekends
or federal holidays. At the end of this 10 day period and the
property has not sold, HUD will review all the offers received
during this time frame. If any acceptable investor
bids have been received and no acceptable owner-occupied bid
was received, the highest acceptable net amount from an
investor is selected.
Should the home not sell by Day 10, the
bidding process is opened up to all bidders on a daily basis.
This includes weekend bids (which open up on the following
business day). Again, the highest acceptable net
bid is accepted. If after 45 days and the property remains
unsold, a lower minimum acceptable bid may be
established.
Should an owner-occupant bidder submit
multiple offers on several properties, HUD will consider the
offers as follows: If the buyer is the sole acceptable offeror
on a single property, that bid will be awarded without
consideration to other offers. Otherwise, the offer that
provides the greatest net return to HUD will be awarded.
Should multiple offers be made on a single property the offer
with the highest net amount to HUD will be awarded.
All HUD homes are sold on an "as-is" basis.
In other words, what you see is what you get. HUD will not
make any repairs or warranties on the properties unless noted
with a repair escrow. Furthermore, HUD will not guarantee the
condition of any house.
Therefore, it is advisable for any buyer to
have a professional home inspection on the home. If an
offer is accepted, the buyer has 15 days to complete any
inspections. It is important to note that should the
utilities need to be turned on; any expense incurred is the
buyer's sole responsibility. Also, should a buyer find
any defects in the existing home, HUD will not pay for any
needed repairs.
All offers are made through HUD’s
electronic bidding. Before bidding your Realtor must be a HUD
registered Real Estate Broker. After working out a purchase
offer with you, they will enter your offer into HUD’s
electronic bidding system. If your offer is the one that is
selected, they will notify you.
Income
Guidelines
Overcoming
Credit Problems
Where
to get down payment money