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HUD Widens Definition of ‘Foreclosed'
The U.S. Department of Housing and Urban Development (HUD) changed how it defines foreclosed and abandoned properties to include properties in default and uninhabitable homes with code violations.
The changes will increase the amount of properties that qualify for the Neighborhood Stabilization Program (NSP). HUD awards grants through the program to purchase and redevelop foreclosed and abandoned homes to stabilize local communities.
HUD secretary Shaun Donovan said the original NSP rules limited the program's impact because the rules needed to be more flexible so that local partners can put taxpayer dollars to work quickly to stabilize neighborhoods hard hit by foreclosure.
Before the changes, HUD defined a "foreclosed" home as a property where the foreclosure process was completed. Because so many homes were held up in the foreclosure pipeline - either through the court system or the government's own incentive programs - HUD changed the definition to include any property either 60-plus days delinquent on the mortgage, 90-plus days behind on tax payments, or where the foreclosure process has been initiated or completed under state or local law.
The term "abandoned" defined a foreclosed property standing vacant for at least 90 days. However, it excluded properties abandoned by the owner hut held tenants in place. To vie HUD grantees the ability to protect a tenant's occupancy, the term was changed. Now, an "abandoned" property includes any home where no mortgage or tax payments have been made for 90 days, or an inspection of the home determines that the property is not habitable and the owner took no corrective action within 90 days of notice.
Bobby Lehmkuhl ׀ Bobby@4Malibu.com ׀ 310.365.7696 ׀ Broker Lic. #01457517
Danielle Dutcher ׀ Danielle@4Malibu.com ׀ 805.341.8769 ׀ Broker Lic. #01463653
Material discussed is meant for general illustration and/or informational purposes only and it is not to be construed as tax, legal, or investment advice. Although information has been gathered from sources believed to be reliable, please note that individual situations can vary, therefore, please consult a professional for specific advice.