Question on HUD Owned Home

[TheOtherMe]

No, it's not my house.

My cousin in Portland is selling her house.  On the listing, it makes a "special note" that it's a HUD Owned home.  Does that mean HUD has foreclosed on her?  

Sounds like she had an offer and she said the buyer "changed her mind".  I think HUD homes are sold as is but I know my nephew had an inspection done.  I don't know the ins and outs of getting the escrow payment back.

I'm judging this cousin if it's a HUD owned home.  She travels all over the world and spends a month at a time wherever.  This house is the one where her mother lived.  She sold the home where she raised her family when her mother died and bought the house as a foreclosure from her mother.  Wouldn't she have had to get a loan when she bought the house from her mother's estate?

I don't know a lot more information than that but would like to know what a HUD owned home is.

Thanks

[Anne_in_VA]

I am not a realtor, but my understanding is that a home that is insured by the government (usually FHA) and the home is foreclosed on, them the government pays off the loan and thus owns the house.  They then turn around and put the house on the market to sell.   The person who owned the house no longer owns the house and will not get any of the proceeds from the sale.

[TheOtherMe]

That was my understanding.   Thank you.

[Tiny]

Here are some other things to consider:   

Not all foreclosures are in bad shape.    And often there were be several "false starts" before the foreclosure is sold.    It's not a smooth easy path for the buyer (there's more "people" and "paperwork" and "red tape" involved.) 

There's usually a set period of time where the house is only offered to First Time Buyers and/or to buyers who will be the primary occupants of the house.    When the set period of time is over - anyone can purchase the house (investors  for example).    

The house will be sold "as is" no matter who buys it - as in the buyer is responsible for any inspections, repairs, code violations, etc.   You cannot "negotiate" and force the seller  (HUD) to fix/change or pay for stuff the house needs (or that you want).   Sometimes the local government has a hand in these sales and there will be responsibilities for the buyer - as in they MUST correct code violations or bring the house up to local standards as part of the sale.     

It's sometimes difficult (or time consuming if going for a 203K rehab loan without knowing what you are doing) for a buyer to get a mortgage on these kinds of houses due to the condition of the house.    

There may or maynot have been any "escrow" put up by the buyer.     I purchased a foreclosure from Fannie Mae (no one said it was a Hud house - but it probably was).   I had to have a signed, notarized letter from my bank stating I had the full sale price available in "cash".   I do not remember putting any money down (escrow). 

[justme]

Like Tiny said, "as is" doesn't necessarily mean it's in horrible condition. It doesn't even mean you can't go in contract pending an inspection. All it really means is that the seller's not going to do anything to the house even if you find something on the inspection. So, if say the inspector finds that the roof is 25 years old and should have been replaced 5 years ago - the seller won't replace the roof or give you money if you ask for it, but you could decide you don't want a house that needs it's roof repaired and back out of the deal. 

[TheOtherMe]

From the listing photos, it doesn't look in terrible shape. It appears there has been updating since it was built in 1952 and does not look like that in the kitchen or bathroom.  It also has solar.  I remember when my cousin did that.   But that means nothing about the roof or the furnace, etc.


Dnephew2 did an inspection on the HUD house he bought.  Depending on what it showed, he was going to consider backing out.  He did buy it and totally rehabbed.  Of course, then he got a new job and sold it.  His house was pretty trashed on the inside.  

I didn't understand how she is expecting to get money out of it since it's HUD owned.  She told somebody on FB, she is going to travel for a year with the money and then buy a place in Mexico.  

She did offer it to me once for one of her trips.  She was going to charge rent and I had to pay the utilities.  Given that I live nowhere near Portland, that was a no go.  I have my own house to deal with.

[haapai]

If this were my cousin, and the house in question was in the same state that I currently live in, I would suspect that she was attempting to sell a house that was in an early stage of foreclosure and that she would be able to keep any proceeds from a sale that occurred before a certain date.  I would also suspect that her odds of selling the house for more than is owed on it, before the clock ran out on her, were slim.  In other words, I would suspect her of happy-facing a pretty awful situation. 

I'd have several ideas regarding how to check out this hunch, at least if the real estate in question was in my own state.

But I can't say much about what this listing means in another state.  Every state has its own real estate laws and foreclosure procedures.  In addition to having different laws, each state has its own legalese, slang, short-hand, and euphemism for various aspects of foreclosure. 

I'm inclined to dismiss the possibility that the house has been listed as a HUD-owned home as some sort of testimony to it having met HUD standards (which were once notoriously nit-picky) at some point in the past. 

[TheOtherMe]

This house is in Portland, Oregon.  I don't live in Oregon.  

Today she is off on another trip and is hoping for a cash over full price offer by the time she returns.  

I will check the realtor site to see if it says HUD owned.  Zillow shows that as a special note.  

I do think she was planning on a large inheritance from her dad.  He died a few years ago.  However, he and her step mother sold the farm and moved in to assisted living probably 20 years ago.  By the time he died, both of them were in a nursing home.  My aunt is now 102 years old.

This cousin is the only living child.  My aunt married late in life and never had any children.  Cousin's siblings are deceased and neither had children.  

[Tiny]

Apr 1, 2019 11:06:51 GMT -5 TheOtherMe said:

I didn't understand how she is expecting to get money out of it since it's HUD owned.  She told somebody on FB, she is going to travel for a year with the money and then buy a place in Mexico.  
 

She may have a lot of equity in the house and a small amount left on the mortgage with a payment she cannot afford.    So, if the house sells for 100K - but she still owes 30K on the mortgage... she's entitled to the 70K minus any back taxes and probably some fees and what not (the Bank wants  money for all the trouble!! As does the county the house is in)     


I've seen something like this happen... the house down the block from me was in terrible shape.  It had been inherited by the "alcoholic" daughter back in the day.   The now well over 60yo still drunk woman who lived there hadn't done anything to the house in decades despite taking a new mortgage on the house. She had managed to pay the mortgage  for years and years until she lost her job (in her late 50's.).   She kept the house going (and falling into further disrepair for years). 

At the time of foreclosure, the mortgage amount was less than 30K.   This was on what  should have been a 200K plus house - if the roof didn't leak, the windows weren't broken, and the garage wasn't falling down, and the furnace wasn't barely working and it had hot water). 

When the house was foreclosed and sold by the bank the final price was 120K (The flipper that bought it sold it 6 months later for 280K).  My sibling and I kept track of the house because we thought it might sell for less...and then we would have bid on it.  That's how I know the details.    

I'm pretty sure the alcoholic daughter received some money from the sale of the house (after paying back taxes and whatever fines the city imposed on the property over the years and whatever  other $$ the Bank wanted.   The City may have waived the fines/fees - but NOT the property taxes.  )

[TheOtherMe]

The realtor site does not mention the house as being HUD owned.  Only Zillow.

I know when she inherited the house from her mother, it was HUD owned.  I'm beginning to think Zillow is picking up that information from that as the county shows a warranty deed at the time of transfer from deceased mother to daughter.  

I do remember her talking about selling the home where she raised her family to cut down on expenses and to buy her mother's home from the bank.  

Her house may be in the early stages of foreclosure, but I do not think it is HUD owned.