Paying for HUD Home Repairs with an FHA 203(k) Loan
February 17, 2008
HUD foreclosure homes are sold “as-is.” However, borrowers can take out additional money for repairs by applying for an FHA-insured 203(k) home loan. Most traditional mortgages will only loan up to the amount of the home’s current market value (i.e. if the home is worth $100,000, they will loan up to $100,000). The FHA 203(k) loan, on the other hand, will lend additional money for repairs. FHA determines the amount of the loan by taking the post-repair market value into consideration (i.e. if the home is worth $100,000 now but will be worth $120,000 after repairs, they will lend up to $120,000).
Learn more about home repairs with the FHA 203(k) loan here: The Secrets of Buying HUD Foreclosures.
Senator Schumer Continues Crusade Against HUD Foreclosure Flippers
February 16, 2008
New York Senator Charles Schumer continued his fight against HUD foreclosure investors by asking the government agency to make several key changes to the HUD purchase process. According to the Buffalo News, Schumer is calling for the following reforms:
• Changing HUD policies to prevent the online flipping of homes to absentee landlords.
• Providing incentives to property disposal contractors who sell HUD homes to owner-occupants. Kathleen Lynch, coordinator for the city’s Anti- Flipping Task Force, says such sweeteners would help get properties into the hands of people who will make improvements.
• Expanding the time during which properties would be offered exclusively to buyers who promise to live in the homes.
The changes may make it easier for owner-occupant bidders to purchase HUD homes with low-ball bids. However, they will certainly make it challenging for HUD investors to continue purchasing these low-cost properties.
$100 Down Payment Incentive on HUD Homes for Sale in Colorado
February 16, 2008
If you’re an owner-occupant bidder in Colorado, you’re in luck. The government is now offering a $100 down payment incentive on HUD homes for sale in Colorado. In order to qualify for the low down payment deal, you need to make a bid for the full listing price and purchase the home with FHA-insured financing. Any HUD approved agent can help you secure the incentive deal - just ask.
Top 10 Foreclosure Cities in America
February 13, 2008
Which cities currently have the highest foreclosure rates? Forbes.com recently published a slideshow featuring the top 10 places where foreclosure is commonplace.
Here are a few cities that made the list:
Albany, NY (1,617 foreclosure filings, .25% of households)
Baltimore, Md (10,059 foreclosure filings, .73% of households)
New Haven, Conn (7,348 foreclosure filings, 1.09% of households)
Washington, D.C. (28,455 foreclosure filings, 1.16% of households)
Sacramento, CA (49,532 foreclosure filings, 3.1% of households)
Stockton, CA (22,184 foreclosure filings, 4.86% of households)
It’s amazing that there are places right now (nod to Stockton) where almost five in every 100 households are facing foreclosure. If you live near one of these top foreclosure cities, you may want to take a look at the HUD homes for sale in your area.
HUD / FHA Increase Mortgage Limits in Wasatch County, UT
February 13, 2008
More good news for Utah home buyers: HUD recently announced that purchasers may borrow up to $327,750 on FHA-insured loans for single family residences in Wasatch County. This is a significant raise from the previous $200,160 limit. A recent HUD press release explains:
Median home prices in Wasatch County have increased dramatically within the last few years. In many cases, HUD has found that purchasers are well qualified from the standpoint of income and credit, but they lack sufficient funds for the size of down payment required on a conventional loan. Since the FHA program requires less of a down payment, it affords more consumers the opportunity to purchase their dream home. The increased loan limits effectively open the market to more of those consumers.
There are a lot of advantages to taking out an FHA-insured loan when purchasing a HUD home. The new limit will be available starting February 18th. See also: HUD Homes in Utah.
Breaking News: National 30-Day Foreclosure Freeze
February 12, 2008
In an accord with U.S. Treasury Secretary Henry Paulson, six of the largest national mortgage servicers have just agreed to offer 30-day foreclosure freezes to delinquent homeowners.
Secretary Paulson explained that the new plan, dubbed Project Lifeline, is designed to encourage non-paying borrowers to seek help:
“This is an important new initiative, targeted to reach not only subprime borrowers, but all 90-day delinquent homeowners nationwide with a step-by-step approach to find individual solutions to individual problems…
Project Lifeline is aimed at homeowners who face a real risk of losing their home, but have not yet addressed the problem. Perhaps they are hoping to find a way to get current on their mortgage payments, or perhaps they don’t think any solution is possible. For whatever reason they have not yet taken action; our hope is that today’s announcement will reach them, and they will reach out immediately for help – especially now that the foreclosure process is upon them.”
The lenders involved make up 50% of the mortgage market and include: the Bank of America, Wells Fargo, Washington Mutual, and Countrywide Financial Corporation.
Many delinquent mortgage holders (who are currently 90 days late or more) will soon receive letters from these lenders, explaining the proccess of qualifying for a 30-day foreclosure freeze. Homeowners will be given 10 days to respond.
Smaller lenders who were not included in the agreement are being encouraged to follow suit.
This could dramatically reduce the number of HUD homes for sale on the market, since these banks offer a huge number of FHA-insured mortgages - many of which are currently in default.
$100 Down Payment Bidding Incentive on Utah HUD Homes
February 12, 2008
The government is currently offering some pretty amazing incentives on HUD homes for sale in Utah. Here are the current deals offered:
- $100 Down Payments! Available to owner occupant homebuyers when purchasing a property at full price and using FHA-insured financing.
- $500 Broker Bonus! Selling brokers can earn an extra $500 for full-price offers on “uninsured” properties when the loan is closed using FHA’s 203(k) Program.
The down-side of these programs are that they require the purchaser too bid for 100% of the asking price. But, for a $100 down payment, it may be worth it.
(By the way, if you’re bidding on a Utah HUD home and are already bringing a sizable down payment to the table, you may want to be wary of selling brokers who insist that you make a full-price offer. Sure, they get the selling bonus. But, that means you may be stuck with a higher mortgage payment than necessary).
NY Senator Seeks to Stop Investors from Bidding on HUD Foreclosures
February 11, 2008
U.S. Senator Charles Schumer is seeking to stop HUD foreclosure home sales to investors. He says that the investor “loophole” is causing communities such as Rochester to deteriorate. According to a recent Wxxi news article:
“Schumer says the speculators then try to “flip” the houses for a quick profit. If they don’t sell, he says they can stand vacant for months or years until they do.
Schumer says the problem is a loophole in a program designed to encourage public employees to buy homes in the cities where they work. They can buy a HUD owned foreclosed house for half the asessed price if they agree to live in it for at least three years and fix it up.
But if the property doesn’t sell within 15 days, it goes onto a general sale list. The senator says that’s when speculators grab the properties and hold them until they can be sold for profit — often leaving them vacant and rundown.
Schumer says he’s introducing legislation to block that loophole and he’s also pushing for more block grant funding to help Rochester rehab vacant houses.”
The senator isn’t the only one trying to remove investors from the HUD bidding process. Government officials in Indianapolis are considering buying up all the HUD foreclosure properties in three zip codes and rehabbing them to sell to low- and mid-income residents.
HUD Foreclosure Homes - Last Chance for a Low Down Payment Mortgage?
February 10, 2008
With the lending crisis in full swing, buyers have found it extremely difficult to get no down payment or or low down payment mortgages. In December, Fannie Mae notified lenders that new loans in declining markets will now require a 5% down payment, at minimum.
HUD foreclosure homes may be the last chance for some buyers to purchase real estate with little down. Freep.com (from the Detroit Free Press) explains that people purchasing HUD homes with FHA mortgages may still be able to get a home with a low down payment - even in Detroit’s declining market conditions. Here’s a blurb from their recent article:
“There are other things potential buyers can do to buy a home with little or no money down, Terrasi [senior vice-president of Flagstar) said. FHA still requires 3% down, including some closing costs, but there are ways to work around that.
And if you are planning to buy a foreclosed home from the U.S. Department of Housing and Urban Development, also known as a HUD home, FHA offers a $100-down program in Michigan with $2,500 to go toward repairs. It must be an owner-occupied home, a rule that blocks investor purchases, she said. Congress is considering lowering down payment requirements on FHA loans and raising the loan limits.”
If you’re looking to buy a HUD foreclosure as an owner-occupant, now may be a good time to check it out. You may also want to take a look at the $5,000 Detroit HUD Homes.
Indianapolis Considers Buying All HUD Foreclosures in 3 Zip Codes
February 10, 2008
Investors in some Indianapolis zip codes may soon find it difficult to purchase HUD homes for sale. A HUD manager is urging city officials to purchase all HUD homes on the market in three zip codes and then sell the properties to low- and moderate-income families. IndyStar.com reports:
“Charles Gardner, a senior HUD manager in Atlanta, where this program is operated, proposed that Indianapolis buy and resell all the houses repossessed by his agency in the three ZIP codes.
HUD takes possession of houses when the borrower defaults on mortgage loans insured by the Federal Housing Administration. Last year, FHA guaranteed about 20 percent of the mortgage loans foreclosed on in metro Indianapolis, Hall said.
Rufus “Bud” Myers, executive director of the Indianapolis Housing Agency, said the potential supply of private housing for Section 8 has been reduced because so many houses are off the market while they go through the foreclosure process. IHA oversees the Section 8 housing program for 27,000 people.
In a letter sent in November to Alphonso Jackson, HUD secretary under President Bush, Myers contends the federal agency is a prime supplier of houses to investors looking for properties to flip. Myers asked that HUD stop selling houses it has taken over in the 46201, 46203 and 46218 ZIP codes.
HUD typically repossesses 80 houses a month in the three ZIP codes. It has about 45 houses in those ZIP codes for sale by its contractor, Hall said.”
Selling HUD homes to high-bidding investors shouldn’t be considered a bad thing - most investors fix up these properties before selling them, improving value of the home as well as the local the neighborhood. If you’re considering purchasing a HUD home in Indianapolis, better bid quickly. You may not have the chance if this proposal is accepted.