How to Find HUD Foreclosed Homes and Special FHA Loans

I’ve always found it interesting that there are so many websites that claim to have a listing of foreclosed homes.  Many of them claim they have HUD (US Department of Housing and Urban Development) foreclosures which are foreclosed homes that had FHA loans.

Though many of these listings may be accurate, there is only one real source to find HUD foreclosures.  HUD contracts different management companies to handle their listings, meaning the websites that list real HUD foreclosures haven’t been easy to find.  For instance, Ten Management is the company that lists HUD foreclosures for Washington state, as well as many other states. 

Luckily for home buyers, HUD has recently updated their site and they now include a directory that directs the borrower to the proper management company.  You can find this website here.

I chatted with Derek Eyring who is the owner and broker of John L. Scott- Lake Tapps office.  Derek is also a HUD registered agent.  Derek told me to buy a HUD home, you must use a real estate agent who is a HUD registered agent or works for a HUD registered agent.  Since Derek is a broker for his office, all of his agents can make offers on HUD Foreclosures.  Derek told to me that many borrowers didn’t buy HUD foreclosures in the past, but there is more listings than previously and they’re great for first time home buyers. 

Many people who are looking for special loans for first time home buyers can also benefit from buying a HUD foreclosure.  Here are some benefits of buying a HUD foreclosure using FHA financing.

• Potential lower price on home
• $100 down
• Most homes are 203k eligible (FHA rehabilitation loan)
• Properties include a free inspection and appraisal (inspection is on the listing websites to review)

Here are a few tips you’ll want to look into prior to buying a HUD foreclosure

• Your real estate agent must be a HUD registered agent or work for a broker who is a HUD registered agent to make offers in your behalf
• HUD will not pay for any of the title insurance policy unless it’s included concessions agreed upon on contract
• There is usually only one escrow company per area that handles HUD foreclosures.  For example, the escrow company for HUD foreclosures in Western Washington is GBS Partners LLC.  Make sure your loan officer and real estate agent contact the local HUD escrow office and find out how long the process is.  When I contacted GBS, they told me that the transaction cannot close for 10 days after the borrower signs!  It’s important you plan accordingly so you know when you’ll be moving and how long you should lock your mortgage rate for.

Doug Stokes, a John L. Scott- Tacoma South agent who has specializes in HUD foreclosure transactions for years, told me in 2008, there would usually be only 1-3 listings in King county at any given time and 2-4 in Pierce County.  Doug has since told me that the available listings are usually more than double than last year.  At the time I spoke with Doug, King County had 8 listings and Pierce County had 7.

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