Sadly, the credit will need to be paid back to the government over a 15 year period though it’s interest-free. Home buyers would be required to repay the government over 15 years in equal installments of $500 for any amount received.  Eligibility caps around $75,000 and $150,000 for joint filers.

Certainly not the incentive that foreclosure buyers were looking for, but this credit may be some help to those looking to buy homes in the next year.

Previously, HUD had offered local Syracuse officials a short postponement. But, when they were unable to find a suitable buyer during that time, HUD decided to go forward with the normal proccess.

Hilary Clinton released a statement condemning HUD’s choice and supporting the local officials:

“After hearing multiple appeals seeking additional time for the City of Syracuse City to continue their search for a developer capable of rehabilitating the ElJay apartments, HUD instead chose to dive head first into the auction process. Today, HUD proceeded with their ill-advised auction which was wholly unsuccessful, and failed to attract a single bidder.”

As foreclosures increase, HUD seems to be having a rather difficult time. They hold too much inventory in declining markets, their president recently resigned amidst scandal, and they are having difficulty working with local governing boards.

See Also: HUD Foreclosure Guide 

Now, HUD is reconsidering the foreclosure purchases. The Cleveland Plain Dealer reports:

“A HUD spokesman said that HUD wants to make sure the program’s requirements and intentions were followed. That could include the goal of strengthening communities as well as making sure HUD got “a maximum return” on property sales to help support the FHA insurance funds, according to the HUD memo.

Another issue apparently will be reviewed: the purported hoarding of $1 houses. Wayne County, Mich., alone has tried to buy about 1,000 $1 houses as it attempts to remove blight, according to the Chapman firm. Cities in the area, including Detroit, complained that the county was overly aggressive, saying they, too, want a chance to buy $1 houses within their borders.”

Should HUD discontinue the programs in these areas, there will be a massive amount of inventory available to investors. However, no one seems to be particularly interested in buying up foreclosure homes in areas such as Detroit. Dozens of homes in the city are already listed at less than $5,000 and there have been few takers.

See also: HUD Foreclosure Guide

A home equity line of credit (HELOC) is secured by the borrower’s home and acts as a revolving credit line similar to a credit card. In addition to a low interest rate, borrowers can deduct the interest paid on HELOC money used to improve or repair their properties. Since HUD properties are sold “as-is” (and have often been used as a punching bag for tenants upset about an impending foreclosure), this tax deduction can be a huge asset.

Unfortunately, lending standards have tightened since the housing market decline and it is somewhat difficult to qualify for a HELOC now. However, those that can qualify will have access to extremely low interest rates. (The prime rate was recently slashed to 5.25% - the sixth cut in the past six months).

See Also:

HELOC Tax Deductions

203(k) FHA Financing

“Like the House measure, the Senate bill has a standard deduction provision, but it allows businesses to apply their net losses to previous years in which they turned a profit. It gives the Federal Housing Administration (FHA) the ability to insure pricier mortgages, and it provides a $7,000 tax credit to those who buy foreclosed properties.”

If the bill goes through, purchasing a HUD foreclosure property may become even more lucrative for investors.

See Also: Congress Considering $15,000 Rebate Checks for Homebuyers 

“Driscoll asked HUD secretary Roy Bernardi in a letter to cancel the April 15th auction so that the city can develop a negotiated sale of the properties. “

The mayor is also asking HUD to allow the foreclosure properties to be sold individually.

As the letter was sent this evening, there has been no immediate response from HUD. Their decision could have a huge impact on the future of HUD foreclosures, however. Should they agree, they may inadvertently give more control to cities and communities. This could result in the loss of funds by keeping properties in the market for an extended amount of time and could also result in reduced inventory for investors.

See Also: Where to Find HUD Homes for Sale 

In addition to the report, buyers can walk through the properties with their agent before placing a bid. Once a bid is placed, the accepted bidder is encouraged to hire a professional inspector to look for issues such as radon gas.

To learn more about analyzing these foreclosure homes, check out our detailed article: How to Evaluate HUD Properties.

“Buy a home through HUD’s Good Neighbor Next Door initiative designed to encourage renewal of revitalization areas by providing law enforcement officers, firefighters, emergency medical technicians and teachers an opportunity to purchase homes in these communities. HUD provides a substantial incentive in the form of a fifty percent discount off the list price of eligible properties.”

In order to qualify, buyers must agree to live in the home and not sell for a specified amount of time.

See: Good Neighbor Program

The Los Angeles Times reports on his final speech:

“There comes a time when one must attend more diligently to personal and family matters,” Jackson said in a brief statement. “Now is such a time for me.”

Noting that he had, during his tenure, “improved housing opportunities for all Americans,” the secretary said “he took great pride” in increased homeownership by minority Americans.

“My life’s work has been to build better communities that families are proud to call home,” he said, adding that his resignation would take effect on April 18 to ensure a smooth transition.”

See Also: HUD Auction FAQs 

A New York Times editorial explains:

“Senior HUD officials have complained that Mr. Jackson instructed them to take into account political ties when making contract awards. He denies it.

Mr. Jackson also denies Philadelphia housing officials’ charge that their city was punished after their housing commissioner refused demands to turn over $2 million worth of public land to a friend of Mr. Jackson, according to local newspapers.

Last week, two key Senators — Patty Murray, Democrat of Washington, and Christopher Dodd, Democrat of Connecticut — wrote a letter to President Bush calling for Mr. Jackson’s resignation. Ms. Murray was displeased by Mr. Jackson’s unwillingness to answer questions about the Philadelphia deal when he appeared before her housing subcommittee.”

It is possible that a change in HUD leadership along with the current HUD issues in New York could result in foreclosure auction policy changes.

See Also: Guide to Bidding on HUD Foreclosure Homes