What is HUD?

It might be a short texting acronym for How yoU Doing.

It is actually The Department of Housing and Urban Development.

 Check them out yourself here:  www.hud.gov

What exactly is a HUD Home?

HUD is a government agency.  The Department of Housing and Urban Development.  They back up FHA Loans and when these default, HUD can end up liquidating the assets on the open market or through other channels.  They also promote home ownership, so they can offer first time home buyers some good options through their various program.  In addition in these tough times they are heading up the government directives like “Making Home Affordable” program. 

Learn more about Making Home Affordable here:   http://www.makinghomeaffordable.gov/

According to their web site:

“HUD’s mission is to increase homeownership, support community development and increase access to affordable housing free from discrimination. To fulfill this mission, HUD will embrace high standards of ethics, management and accountability and forge new partnerships–particularly with faith-based and community organizations–that leverage resources and improve HUD’s ability to be effective on the community level. “

So what does this mean to you.    Well HUD works with FHA (The Federal Housing Authority) and when someone defaults on their FHA guaranteed Loan or Mortgage, then the house can end up going back to HUD to liquidate if it hasn’t been successfully sold previously by the bank or the home owner in a short sale.

If a house is very upside down, it may be destined to go to HUD, because FHA has minimums they are allowed to take in a Short Sale based on the original purchase price, appraisal and loan amount.  So if a house was way over-priced a couple years ago or has really declined in value, no buyer will be willing to pay what FHA is required by law to take as a minimum amount.  Then the home goes back to HUD to liquidate.

For the State of Colorado and in Montrose the REO Management Company used by HUD is MCB  (Michaelson, Connor and Boul).  They handle all the liquidation for HUD in a region of the United States including Colorado.  http://www.mcbreo.com/st_comain.htm   According to their website, they also cover Arizona, Michigan, Montana, Nevada, Utah and Wyoming.

HUD hires through their REO Asset Management Company one Real Estate agent for a very large multi-county region, they get a small amount of money for listing each of the properties in the MLS.    For Montrose Colorado this agent is Marilyn Hammar.  (Please don’t call her.  She just puts them into the MLS for the Government.  She doesn’t do photos, she doesn’t inspect the properties, she doesn’t have knowledge of them beyond what she is provided…)    Here is a link to a list of all the local listing Brokers for MCB REO in Colorado.  Use these names for your local agent to easily search (by agent) all the HUD homes in an area…

http://www.mcbreo.com/colorado/collb.htm

HUD typically has the homes winterized and secured with a standard key that is the same for all HUD homes in an area.   This allows any agent to show the home (as long as they have a HUD key in their office). 

A Real Estate office and its Broker Owner (Here at Century 21 Action Realty in Montrose Colorado, that is Ninah Hunter) must be registered with the company responsible for liquidating HUD assets in your region in order to make offers on properties.  This is not hard but does require some paperwork.  Once done any of the employed agents or brokers can submit HUD offers on behalf of their buyers.

Sometimes HUD properties will be featured in Auctions, online or offline.  Here in Colorado MCB allows electronic bidding.

Just like with Bank Owned properties don’t expect HUD to fix a lot of things for you.  You are better off documenting the need and reducing your offer price and then taking care of these things yourself.

HUD/FHA do offer a “K” Loan (a small version of their 203K Rehabilitation Loan).  The “K” Loan allows a buyer to finance in and escrow the repair costs for the home.  The repairs must be cosmetic and not structural in nature.  The FHA 203K Loan will handle structural repairs but it is a lot more paperwork.  The “K” loan is perfect for repainting, replacing carpet, built in appliances, tile or linoleum, etc.   The 203K grown up version can be used on a complete gut and remodel.  They lend based on the “after repaired appraised value“, then the draws are handled like a construction loan.

So what are you waiting for go out and buy a HUD home today… Just kidding, but it sounded good. 

If you are in the market already for a house and you are looking for something that might need a little work, a HUD home is a great place to look…

But a Realtor is really the best place to start, because they will have HUD homes, Bank REPOs, Short Sales, Desperate Sellers (Divorce, Illness, Death), etc.   They allow you the best shot at looking at the whole market.  But it never hurts to look around a bit on your own.

Check out my websites for properties and homes in the Montrose Colorado area.

www.SoldCORE.com

www.COrmsbee.c21actionrealty.com

www.MontroseGoldTeamBlog.com

Hope this helped you get a better understanding of what a HUD Home is and how you might go about looking at one.

If you want to buy or sell a home in Western Colorado, especially in Montrose and the surrounding areas, give me a call.  My name is Chris Ormsbee and I can be reached on my Cell phone at (970) 209-0252.

From where I am sitting, I am still seeing a relatively high number of foreclosures in our area.   I think our market tends to lag the general market by about a year to 18 months. 

Some predict a further mushrooming of this effect as many banks have been waiting to test the water and see what is coming next.

Montrose Colorado is a beautiful place to live and was growing at a good pace and is still expected to double in size over the next 10-20 years. 2 Years ago this was easy to believe.  Now I think it will be pushing clear to the 20 year mark, unless the money supply situation straightens itself out.

Banks supposedly have money to lend (hundreds of millions of it financed off the tax payers backs).  But Banks are not lending as much as they want to because of new regulations and policies enforced by underwriters to ensure safer loans.  Whether you are for or against this doesn’t really matter. Tight lending it is stopping people from buying and selling homes, that would of otherwise been bought rather than rented.

At the same time Credit Card companies are squeezing already strapped people (including me), by cutting their credit limits down and raising interest rates.  Eliminating peoples “Cushion” or “Float” Capital.  This is particularly important for the small business owner with one or two employees who’s cash fluctuates with jobs as they come and go or pay or delay… 

This means people like Realtors and small contractors who rely on credit to finance their business are unable to finance their business and are tapping into any savings or reserves they may have.    They are probably losing out on some jobs because of this lack of available credit.

Many also do not understand that once their credit limit is cut, if their balance exceeds 50 % of the allowable credit, then it docks their credit score, possibly preventing them from getting a home loan.

The credit crunch is real and its affecting hundreds of millions of people and guess who is making money off of it… The banks, the same banks that got us into this mess.  I know there are thousands of “preachers” out there who support that everyone have a “strong” or even entirely cash position and boy wouldn’t that be nice, but Credit is a lot like a drug, they get you hooked and used to using it and then when they cut you off you are in real trouble.  Its unfortunate that they are using the current housing crisis as a time to try to make more money off the backs of the struggling American and that they have overtightened the money supply for home loans.

Montrose Colorado really didn’t have a foreclosure problem, until the money supply dried up.  This stopped construction and caused lots of layoffs and for people like Realtors, their income was halfed, quartered or even eliminated, leaving the them with a deficit.

I personally had a sizable chunk of savings and available credit for “down times”, but it has been eroded and used up and I can’t just force people to use me or to even decide to buy a house. 

I have never worked harder and been paid less in my life.

There is a glut of inventory on our market and many prices have not fallen yet to where I feel they will actually be purchased.   Most shoppers are looking for a 50 cent on the dollar deal…  Few exist.  Those that do are offered from “motivated” banks, but they usually require a great deal of repair and fix up, so this usually cuts out the first time home buyer and focuses on the investor.

Then President Obama decides that we will incent or attempt to force banks to do Loan Modifications with their borrowers, but the process is extreamly slow, uncharted territory and many are getting ripped off by shisters advertising on the radio, internet or otherwise that they will take care of everything and they are not, the people still get foreclosed out.  Others upon ill advice of attorneys or other counselors or spinners are suggesting to people to miss a payment to begin negotiations.  While this kinda makes sense it is just increasing the problem and it screws ones credit up BAD for about two years.  This is basically the same as a short sale on your credit based on my understanding. 

If you are going to do a Loan Modification, either do it yourself or call the state hotlines first.  Get references for companies from real people (preferably in your area and trust me its worth your time particularly if you REALLY want to keep your home).   Ensure that the hired negotiator will take no upfront moneys from you.  They only get paid when they get the Loan Modification with the exception of a small fee (under $150).  If they want more upfront money be very careful and require joint notification of each submittal and call the bank yourself to follow up with it.

Of course you can always call a Realtor for advice!  Ask a few questions to see if they know what they are talking about and if your not convinced, try another.

You can reach me at (970) 209-0252. 

Thanks Chris

NAR Real Estate Summit - Summary Videos…

Ok, here is a short post.  Some great informational video snipits from the Real Estate Summit.

http://www.realtor.org/meetings_and_expo/real_estate_summit

Check it out!  Elegant and well edited.  Takes about an hour to watch them all.  Some great ideas and explainations of what is going on… A view from the top!

Here is a link to the site for Loan Modifications

http://www.makinghomeaffordable.gov/

and if you want even more cool info check out:

http://www.realtor.org

They provide tons of free information and tips and keep you up to date on current affairs and new laws.