HUD / REO Overbid Rule Change for 2014?

Real Estate Broker/Owner with Providence Group Realty TREC# 0608931

On 4/24/2014, Amerifirst Mortgage posted this video (presented by Dan Moyle) on youtube advertising a recent change to FHA underwriting guidelines that will now allow buyers using 203k loans to overbid on a HUD property without having to pay the difference in cash.  The video touts that "With the FHA 203k loan, borrowers can now bid on a HUD home based on what the value of the home WILL be, not what it is." 

Providing the actual rehab cost isn't cannibalized by the amount of the overbid, this could be a game changer for buyers who need to reserve capital but want to compete against cash or conventional loan buyers.



For an EXCELLENT article documenting what we all hope this new change will help solve, see Dan Rosenberger's blog post from 10/1/2013, "When HUD Shows the As-Is Appraised Value as Zero - Be Careful."

We reached out to Dan Moyle and Amerifist Mortgage for substantiation and Dan quickly assisted with the official notice from HUD: ML 2013-44.

Amerifirst has been able to successfully get files underwritten in territories they serve, but as of right now, they are not in the Texas market.

We are seeking a Texas lending success story, as our current SMEs are stating that they don't have a successful approval instance for the overbid getting financed with the loan.


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Lyn Sims
RE/MAX Suburban - Schaumburg, IL
Schaumburg Real Estate

My first thought is to say great but I'd have to think of the consequences of overpaying for a house that already needs work & then mortgage that work/materials. Most times the home is undervalued but that can't be correct 100% of the time obviously & you'd have a buyer that is underwater from the work needed. One LO mentioned that most of these homes don't need 10K worth of work - where's he been at? Check out the price of carpeting, hardwood or laminate floors guy.

May 11, 2014 07:41 AM #1
Rodney Mason
Guaranteed Rate NMLS# 2611 - Atlanta, GA
VP of Mortgage Lending - AL, FL, GA, SC, & TN

In our conversations with HUD, that does not appear to be a correct interpretation of HUD's new policy.  We have not found anything that states that HUD allows the overbid to in fact be financed in. 


May 31, 2014 07:19 AM #2
Amanda Thomas
Providence Group Realty - Plano, TX
​Broker, SRES®, BPOR, MCNE, ​Certified DRS Agent™

@Rodney Mason, we found a local lender (DFW market) who claims they can do this based on the ARV of the 2nd appraisal. There is a lot of controversy among lenders on whether or not this is true / valid. To date, no one (other than AmeriFirst) has been able to say they were able to successfully close a file using this strategy.

Jun 02, 2014 04:32 AM #3
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Amanda Thomas

​Broker, SRES®, BPOR, MCNE, ​Certified DRS Agent™
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