Most people who purchase property take out some kind of loan with a lender and pay a mortgage each month. If they fail to pay the mortgage, the lender attempts to obtain that balance by going through foreclosure.

While many of these lenders are banks, in many cases, the lender is the Federal Housing Administration (FHA), as managed by the Department of Housing and Urban Development (HUD). Thus, an HUD foreclosure describes foreclosure actions on FHA loans and, in fact, given that the FHA is the world’s largest insurer of mortgages, many foreclosures are thus HUD foreclosures.

Special Benefits

As the new de facto owner of the property, in order to recoup financial losses, HUD naturally places these properties on the market, and typically below market value (and without any liens). In fact, certain programs within the HUD allow individuals who work in specific professions (such as teachers, firefighters, etc.) to sometimes obtain these properties under certain conditions, such as in revitalization areas.

A Different Type of Foreclosure

However, it is also important to note that HUD does not warrant the condition of its properties, nor does it correct defects. The new owners are 100 percent responsible for making any necessary repairs; thus they will want to ensure that a licensed, professional home inspector performs an inspection prior to purchasing the property. However, FHA does offer a 203(k) Rehabilitation Loan, which is designed to allow the borrower to simply obtain one mortgage loan at a long-term fixed or adjustable rate to finance the acquisition and rehabilitation of the property.

Working with a real estate attorney who understands all of the applicable laws and procedures is advisable if you are dealing with HUD foreclosure. This is because the foreclosures aren’t sold in accordance with typical procedures, but are instead sold as part of a bidding process that favors individuals who want to reside in the home versus investors or companies who want to improve the property and flip it. Your attorney will not only ensure that the foreclosure was done in the proper legal manner, but will work with you to submit bids. Experienced real estate attorneys can also work with investors if the property fails to sell to owner-occupants (as well as other entities such as brokers, governments, nonprofit organizations, and others).

Birmingham & Mobile Foreclosure & Real Estate Attorneys

Cloud Willis & Ellis’ experienced Birmingham foreclosure and real estate attorneys work to ensure that any foreclosure and real estate  transaction is in compliance with all the applicable laws and procedures. Our attorneys can assist the lender with renegotiation of loan and mortgage modifications, short sales, deeds in lieu of foreclosure, deficiency judgments, and other important processes involving property and real estate. We can save you time and money in this challenging process. Contact us today to set up a consultation.