In these days of foreclosures, REO and short sales, we often gear the expression "HUD Homes." And while most buyers know that these homes are foreclosed properties, most do not understand the difference between a HUD home and other distressed properties.
Very simply put, a HUD home is a one to four unit foreclosed home that had an FHA guaranteed loan in place. When the borrower defaulted, the lender took possession of the property which was then turned over to the Department of Housing and Urban Development in exchange for a cash reimbursement.
This means that the government of the United States actually owns these homes outright, and can offer them for sale or dispose of them by any legal method under law.
There are other kinds of foreclosures that are not HUD properties and that may be owned by a bank or other investor. These houses are generally being held as REO (Real Estate Owned) properties by their respective owners. Each bank may decide on what to do with their properties, and how to dispose of them.
But HUD properties are sold by a singular and uniform method In the state of Georgia, a contractor has been hired by HUD to assist with accepting bids and assigning contracts to prospective buyers!
So while all HUD homes are foreclosures, not all foreclosures are HUD homes! Only those houses that had FHA guaranteed loans and now belong to the government are being offered as HUD homes!
Next installment: How do I find a HUD property in Georgia?
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HUD homes are another ball game. Agents need to have in-depth knowledge to be successful and close escrows.