When a Federally Insured Mortgage goes into foreclosure, the lender can collect on the mortgage insurance and transfer ownership of the foreclosed property to the U.S. Department of Housing and Urban Development. The Department is commonly referred to as “HUD,” and the foreclosures transferred to HUD are called “HUD Homes.”
HUD Homes are sold on an “as-is” basis. If there are any defects in these properties, HUD will not make repairs.
HUD homes are offered exclusively to Owner-Occupants, Nonprofits & Government Agencies for 30 days. If an acceptable bid is not received during the first 30 days, daily bidding opens for all bidders on day 31.
Your online bid must be placed by an agent associated with a HUD Approved Broker. The following four steps must be completed before your bid is submitted:
WHAT IS EARNEST MONEY?
Earnest money is money put down to demonstrate your seriousness about buying a home. It must be substantial enough to demonstrate good faith and is usually 1-5% of the purchase price. [HUD will specify how much earnest money is required for each HUD home bid.] If your bid is accepted, the earnest money becomes part of your down payment or closing costs. If your bid is rejected, the earnest money will be returned to you. If you back out of a deal [after a contract has been executed], you may forfeit the entire amount. – HUD.gov “100 Questions”
