When a borrower forecloses on a home purchased with an FHA loan, that property becomes a unique type of REO. In this edition of Greg Toussieng’s series on REO listings, the CEO of Choice Home Mortgage explains what a HUD Home is.
As Greg Toussieng explained in the debut of his REO listings blog series, an REO is a foreclosed home that has been acquired by a lender, broker or other mortgage entity. However, there are many different types of REO properties available on the market. One such specific category of these properties is a HUD home.
A HUD home is a residential property that has been acquired by the U.S. Department of Housing and Urban Development (HUD) when a borrower forecloses on an FHA Loan. These properties are one to four unit structures in residentially zoned lots.
FHA Loan Foreclosure
The Federal Housing Administration (FHA) offers a variety of home loans and mortgages that are incredibly appealing to the first-time home buyer. With alluring promises of low down payments, low closing costs and low credit requirements, an FHA Loan sure looks like a great deal to someone inexperienced in the housing market. Unfortunately, these too-good-to-be-true deals can often fizzle out for individuals who walk into the homebuying process ill-prepared.
Is a HUD Home the Same as an REO?
The short answer is: yes. A HUD home is essentially an REO that was originally purchased with an FHA loan that has since foreclosed; as a result, the home has been relisted by the U.S. Department of Housing and Urban Development for public purchase.
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