BUYERS
What do I need to have to start searching for a house to buy?
The most powerful tool you can have in the search for a home is either proof of cash and/or a current pre-approval letter from a bank or lender that shows a seller you are prepared to purchase now.
What is a bank or mortgage lender going to require of me if I need a home loan?
What about my current financial status could disqualify me for a loan?
Are there any special programs for first-time buyers?
How do I get free money to use as a down payment on a house?
How can I help my child or other family member buy a HUD house?
The second option would be you purchase the home in your own name. Unfortunately, HUD will not allow you to place a bid during the owner occupant bidding period. HUD considers these types of purchases “investment”. The good news is that there are many houses that can be purchased under the “all bidders” bidding period that would allow you to purchase a home as an investor. In these cases, HUD has no occupancy restrictions that would prevent you from allowing a family member to occupy the home. It is important to remember that you and your family member will not be eligible to benefit from homeownership savings such as homestead exemption. This type of purchase will have financial ramifications to you that you should seek advice from an accountant and/or attorney for.
The final option would be co-signing on a FHA loan with the family member. They would be the actual qualifying owner occupant so they could bid on a home during the “owner occupant” bid period. You and the family member would be financially liable for the repayment of the loan. Here again, it is important to remember that you and your family member will have financial ramifications you both should seek advice from an accountant and/or attorney for.
Can I save money on student housing by buying a home?
Can I buy a house for a family member but put the deed in my name?
I’m in public service. I was told I can get a HUD house for 50% off the price. Is that true?
Can’t I just get a loan directly from HUD if I buy a HUD house?
I’ve got cash and can close ASAP! Will HUD make a special consideration for my offer?
Why does HUD care who buys the house?
Why can’t I just email the listing broker an offer?
Why does HUD sell their homes through a sealed bid?
- To make absolute certain no one, other than you and your real estate professional, can see your offer.
- To prevent pressure to overbid and/or bidding under coercion.
Through its sealed bid process, HUD allows everyone the opportunity to place a single bid they are comfortable with, without stress from what others may be bidding.
Will I be able to change my bid after I place it?
Why can’t you tell me the status of my bid?
Can I make a backup offer on a HUD home?
Why doesn’t HUD allow investors an inspection period?
Why are HUD FHA loans different from traditional FHA loans?
Why can’t I move in or make improvements to a house before closing?
Why can’t I have the HUD key after I close on a house?
Are HUD homes low-income houses for rent?
Are HUD homes rent-to-own houses?
Where can I get more information about rent-to-own houses?
What’s the difference between renting and owning?
LENDERS
FHA Single Family Housing Policy Handbook (HUD Handbook 4000.1)
- Click on this link to access the Online SF Handbook
- Click on “Online SF Handbook” (the top selection in the right side column).
- Click on “Okay” when a blue box pops up that says, “You are currently leaving the www.hud.gov website, and headed towards: http://nfs/c07/h02/mnt/173009/domains/100reo.com/html.allregs.com/tpl/public/fha_freesite.aspx. Are you sure you want to proceed?”
- A white box will open called the FHA Single Family Housing Policy Library.
- Click on “Advanced Search” and type in “REO”.
- Results will include the FHA Handbook policies, mortgagee letters, housing notices, and other documents that are applicable to HUD Homes.
- For best results, click on the “FHA Handbook” where you can then narrow your search even further by selecting “HUD” or “real estate owned”.
FHA Amendatory Clause & Real Estate Certification
- FLORIDA & GEORGIA – Sage at Atlanta.Amendment@SageACQ.com to review and execute. The listing broker should be the last party to execute both documents.
$100 down on all FHA loans
- FLORIDA & GEORGIA – Sage: Go to http://sageacq.com/atlanta-hoc-region/, download and complete the appropriate addendum, and email it to atlanta.amendment@SageACQ.com.
FHA Repair Escrows-Contracts with “ie” Financing
HUD contracts that have “203 (b) repair escrow” selected in Section 4 of the HUD sales contract are offered FHA insurable if the home is repaired to meet FHA minimum property requirements (MPR) within 30 days after closing (never before). These homes come with a Property Condition Report/Summary that outlines current MPR requirements. The buyer is responsible for paying for a new FHA appraisal that must affirm or refute the existing repair escrow items. It is important to note that the new FHA appraisal may reflect additional MPR items. The buyer must obtain estimates from a licensed contractor to remediate all MPR items. The repair escrow cannot exceed $10,000 (plus the 10% reserve). If it does, the buyer will have to cancel their contract or convert their FHA loan to a Streamline or 203K loan. The repair escrow is not a seller credit or gift and cannot be collected in cash from the buyer at closing. Rather, 110% of the repair escrow must be added to the buyer’s mortgage. No one can waive or decline the repair escrow. After closing, the buyer has 30 days to complete all repairs and schedule a follow-up home inspection with the FHA appraiser or a FHA compliance inspector. If the repaired home meets FHA’s MPR, the lender should authorize the HUD Buyer Select Closing Agent to release the escrow funds to the buyer. To modify the repair escrow, see below:
- GEORGIA – Pemco: The lender is required to prepare a letter (on letterhead with full contact information) explaining that the repair escrow modification is a condition of the loan as supported by the new FHA appraisal. The letter is to be given to the buyer’s agent. The buyer’s agent must go to https://pemco-limited.com/pemcoltd/wp-content/uploads/2021/05/Amendments-Change-Finance-Type-05.24.21.pdf download and complete the appropriate addendum, and email it to HUD.ECA@PEMCO-Limited.com accompanied with the lender’s letter.
- FLORIDA – Raine & Company: The lender is required to prepare a letter (on letterhead with full contact information) explaining that the repair escrow modification is a condition of the loan as supported by the new FHA appraisal. The letter is to be given to the buyer’s agent. The buyer’s agent must go to https://rainecompany.com/amendment/, complete the 1-step online form, and check their email (including junk/spam folders) for an email from amendments@rainecompanies.com. The buyer’s agent and the buyer must sign the form and email it back to the exact same email the buyer’s agent received accompanied with the lender’s letter.
Repairing HUD Homes Before Closing
Who should the appraiser contact for access info and confirmation of active utilities?
TITLE COMPANIES AND REAL ESTATE ATTORNEYS (BSCAs)
FL & GA - How do I get set-up to use the Yardi portal?
FL & GA - How do I get my portal access re-activated?
FL & GA - How do I schedule a closing?
GEORGIA – Pemco: Upload a preliminary HUD-1 package in P260 that includes a HUD-1 Settlement Statement (lender approved), tax bills, signed closing instructions, outstanding invoices, and warranty deed with return address instructions no later than 5 days prior to closing. It is not necessary to request a closing date or schedule your closing with PEMCO Limited.
FLORIDA – Raine & Company: Go to https://rainecompany.com/bsca/, complete the 1-step online form, and upload the settlement statement (CD/ALTA or HUD-1), deed, return label (to return the executed deed), signed closing instructions, supporting documents to include: tax bills, association invoices & an invoices for any other expenses being paid on the settlement statement no later than 5 days prior to closing.
FL & GA - How do I report a title or HOA issue?
GEORGIA – Pemco: All issues should be immediately emailed to the asset manager at HUD.CustomerService@PEMCO-Limited.com along with all supporting documentation.
FLORIDA – Raine & Company: All issues should be immediately emailed to the asset manager at closinginvoices@rainecompanies.com along with all supporting documentation.
FL & GA - Who will be my closing contact
GEORGIA & FLORIDA – Asset manager team members are assigned to cases as the pre-closing package is pulled from the P260 portal for review.
FL & GA - Will HUD allow tax bills, etc. to appear on the HUD-1?
GEORGIA – Pemco: All bills/fees should be immediately emailed to the asset manager at HUD.CustomerService@PEMCO-Limited.com along with all supporting documentation.
FLORIDA – Raine & Company: All bills/fees should be immediately emailed to the asset manager at closinginvoices@rainecompanies.com along with all supporting documentation.
ALL HUD HOMES - What inspections will HUD provide?
ALL HUD HOMES - Outside of loan costs, what other costs should I prepare the buyer for?
ALL HUD HOMES - Who will sign the Warranty Deed?
REAL ESTATE PROFESSIONALS
How do I show a HUD property?
Showing instructions for our HUD properties can be found in the MLS agent remarks, online show assist, Agent Inbox, or by simply calling 800-454-3422 and pressing “1”.
Commission on HUD homes
Required escrow deposit on a HUD property
GEORGIA – Pemco: $500 for sales price $50,000 or less; $1000 for sales price over $50,000; $2000 for sales price over $250,000
FLORIDA – Raine & Company: $500 for sales price $50,000 or less; $1000 for sales price over $50,000
Closing costs HUD will pay
Who selects the closing agent on a HUD house?
Modifying, canceling & status update on a HUD bid
No party can give you a status update on your bid. All bids are sealed, even from the listing brokers. The ONLY way to check the status of your bid is for you to log in to your HUD Homestore account and click on “search” under the “Review Your Bids” section. DO NOT enter any search criteria. Your bid should be the first one on the list. You want to look under the “Bid Status” column and you will see a 2 or 3 letter abbreviation. If you hover over the “?” you will see a description of what the abbreviation means. All abbreviation explanations are very clear EXCEPT the “CA” which tells you the asset manager has cancelled your bid! What this actually means is that the asset manager has released (cancelled) your buyer’s social security number so they can bid on another property if they want to because they didn’t win the bid on the current property.
Reports HUD provides to the buyer
Buyer will be responsible for: appraisal, septic inspection, well inspection, environmental report, structural engineer report, survey, home inspection, utility activation/inspection, mechanical systems check, seller and buyer closings costs (minus what the buyer’s agent entered on line 5 of the HUD Sales Contract) and/or FHA compliance inspections.
HUD home utility activation
Amending the HUD contract
GEORGIA – Pemco: Go to https://pemco-limited.com/hud/forms, click on the “Amendments” section, download and complete the appropriate addendum, and email it to HUD.ECA@PEMCO-Limited.com along with supporting documentation for your request.
FLORIDA – Raine & Company: Go to https://rainecompany.com/amendment/, complete the 1-step online form, and check your email (including junk/spam folders) for an email from amendments@rainecompanies.com. You and your buyer must sign the form and email it back to the exact same email you received along with supporting documentation for your request.
Extension fees on HUD properties
GEORGIA – Pemco: Go to https://pemco-limited.com/pemcoltd/wp-content/uploads/2021/05/Extension-Request-Form-05.24.21.pdf, download and complete the addendum, and email or overnight it to Pemco at HUD.ECA@PEMCO-Limited.com (or if extension funds are due, mail it to PEMCO Limited, 3131 South Vaughn Way, Suite 428, Aurora, CO 80014), along with supporting documentation (if needed, i.e. for title issues or outstanding invoices), and either an updated letter from the lender giving the current loan status and outstanding conditions, or an updated proof of funds letter for cash closings. For first extensions on owner-occupied properties, the extension may be submitted without the extension fee. Investors must always submit an extension fee except in the case of title issues. Second extensions and beyond must be submitted with an extension fee except in the case of title issues.
Extension fees are as follows:
- For sales price $25,000 or less, $150 ($10 per day)
- For sales price $25,001 to $50,000, $225 ($15 per day)
- For sales price $50,001 or more, $375 ($25 per day)
FLORIDA – Raine & Company: Go to https://rainecompany.com/extension/, complete the 3-step online form, and check your email (including junk/spam folders) for an email from extensions@rainecompanies.com. You and your buyer must sign the form and email it back to the exact same email you received along with supporting documentation (if needed, i.e. for title issues or outstanding invoices), and either an updated letter from the lender giving the current loan status and outstanding conditions, or an updated proof of funds letter for cash closings. For first extensions on owner-occupied properties, the extension may be submitted without the extension fee. Investors must always submit an extension fee except in the case of title issues. Second extensions and beyond must be submitted with an extension fee except in the case of title issues.
Extension fees are as follows:
- For sales price $25,000 or less, $150 ($10 per day)
- For sales price $25,001 to $50,000, $225 ($15 per day)
- For sales price $50,001 or more, $375 ($25 per day
Canceling a buyer’s HUD contract
HUD’s asset managers require a specific cancellation form and supporting documentation to cancel a contract as follows:
-
GEORGIA – Pemco: Go to https://pemco-limited.com/pemcoltd/wp-content/uploads/2021/05/Amendments-Contract-Cancellation-Form-05.24.21.pdf, download and complete the addendum, and email it to HUD.ECA@PEMCO-Limited.com along with supporting documentation such as a loan denial and/or unfavorable inspection results. Email subject line should include the property address, HUD case#, and buyer’s name(s).
FLORIDA – Raine & Company: Go to https://rainecompany.com/cancellation/, complete the 1-step online form, and check your email (including junk/spam folders) for an email from cancellations@rainecompanies.com. You and your buyer must sign the form and email it back to the exact same email you received along with supporting documentation such as a loan denial and/or unfavorable inspection results.
It is important to note that investors are never eligible to receive their EMD back unless HUD cancels the contract due to a title deficiency at their own discretion.
Buyer access to a HUD house after closing
The property is currently keyed to a master HUD key that thousands of people have access to. To ensure the safety of the buyer, the property, and the buyer’s possessions, HUD mandates that the buyer rekey the entire home and any/all outbuildings immediately after closing.
The buyer’s agent may only borrow the listing agent’s key out of the lockbox to gain entry in to the home for the buyer after the closing.
How to register to show & sell HUD homes
The Broker of Record must be HUD-registered with an active NAID number for all related licensees to be eligible to show and bid on HUD properties. Once registered, Brokers may not share their account with their agents. Rather, the broker is to provide their NAID number to their agents in order for them to create their own bidding account on HUD’s website www.HUDHomestore.com.
Below you will find step-by-step instructions and links to register your brokerage:
- Ensure you have a PDF copy of your real estate broker’s license.
2. Go to: https://www.hudhomestore.com/Listing/NaidApplication.aspx?sLanguage=ENGLISH
3. A new window will pop that will take you to a system called “Yardi”. Click on “Apply for a new NAID”.
4. Click on “Selling Broker”.
5. Complete the online application. On the bottom, left hand corner, upload the PDF copy of your real estate broker’s license.
6. Check the box that says “I am not a robot”.
7. Click “Register”
8. You will get an approval email with your new HUD NAID number OR an email requesting corrections or additional information.