It's
clear that government foreclosures and other government houses for sale
are hidden gems of real estate that can deliver a buyer tremendous
savings.
While the process for getting into government foreclosure
homes is not particularly mysterious, it's just not well publicized. As
a result, these low cost homes tend to get lost in the sea of
traditional property listings.
Following is a closer look at the
different types of government foreclosures: HUD Homes, VA Foreclosures,
Fannie Mae Foreclosures, and Freddie Mac Foreclosures.
HUD boasts a large selection of government foreclosures, due in large
part to the way HUD operates. HUD is the arm of the federal government
that is responsible for increasing home ownership in the United
States.They achieve that aim by working with the FHA (Federal Housing
Administration) to insure mortgages that would otherwise not measure up
to a lender’s traditional standards for credit worthiness or
down-payment requirements. These higher risk loans ultimately produce a
higher default rate that unfortunately results in more frequent
foreclosure.
When these HUD homes are foreclosed on, HUD becomes the property
owner and offers these cheap houses for sale to the general public.
During the offer period, potential buyers place sealed offers, or bids,
on the property. Bids must be submitted by a qualified HUD homes broker.
When the offer period is complete, the bids are opened, and the highest
reasonable bid is accepted.
VA foreclosures result when a mortgage backed by the VA Loan Guaranty
Service, which allows a veteran or active duty service person to get
terms on a loan they might not otherwise qualify for, goes into default.
These government foreclosures are posted for sale to the public. Note
while you need to be a veteran to get a VA loan, you don’t need to be a
veteran to buy VA foreclosures. Offers on VA foreclosures are submitted
by a buyer’s agent to the VA’s listing broker.
Fannie Mae foreclosures are homes that were once financed under
conventional mortgages, and after an unresolved period of financial
distress, sold to Fannie Mae ( Federal National Mortgage Association).
Fannie Mae provides a number of resources to low to middle income
families aimed at helping them purchase a home. If these homeowners
cannot maintain their mortgage payments, the home is foreclosed on and
sold to the general public to recover the amount of the original
mortgage. Fannie Mae foreclosures are sold through local brokers who
submit offers on these homes.
Freddie Mac is a public corporation started by congress in 1970 that
provides credit guarantees to mortgage lenders and expands
opportunities for home ownership. Like Fannie Mae, Freddie Mac
repossesses homes due to loan defaults and is motivated to sell these
foreclosures to the general public. And, like Fannie Mae, Freddie Mac
may offer special financing and other buyer assistance programs to
encourage sales of their foreclosures. The selling agent can provide
details on any available programs. As with other government houses for
sale, offers for Freddie Mac foreclosures need to be submitted through
local qualified brokers.
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