FHA-insured homes that go into foreclosure are acquired by the U.S. Department of Housing and Urban Development (HUD). HUD homes are offered for sale through Internet sites managed by management companies under contract to HUD.
Real estate agents who register with HUD can submit offers on behalf of their clients. HUD pays the agent's commission.
HUD homes are sold as-is, without any warranty. HUD doesn't make repairs nor pay to correct any problems. Again, that makes it critical to have homes inspected before making an offer.
In designated revitalization areas, law enforcement officers, K-12 teachers, firefighters and emergency medical technicians can purchase a home at 50 percent off the listing price. (They must commit to live in the property for three years.) Additionally, evacuees from hurricanes Katrina, Rita or Wilma can purchase a HUD home at a discount.
Tips From HUD
The U.S. Department of Housing and Urban Development has 10 tips for avoiding foreclosure:
- Don't ignore the problem.
- Contact your lender as soon as you realize you have a problem.
- Open and respond to all mail from your lender.
- Know your mortgage rights.
- Understand foreclosure prevention options.
- Contact a HUD-approved housing counselor.
- Prioritize your spending.
- Use your assets.
- Avoid foreclosure prevention companies.
- Don't lose your house to foreclosure recovery scams.