The United States Department of Housing and Urban Development (HUD) is a government department devoted to subsidizing housing for low-income and otherwise-vulnerable Americans, such as homeless military veterans (HUD-VASH).  This is often referred to as Section 8 housing, and is most commonly seen in the form of vouchers being provided to eligible tenants, which translate to a discounted rental or purchase rate.  HUD is the umbrella organization that insures the loans handed out by various federal and state government agencies (most prominently FHA loans). 

      As with all loans, there are consequences to defaulting on payments of HUD-insured mortgage or other loans.  The home is foreclosed, but not by the standard process.  Instead, HUD takes possession of any property paid for by a loan from a government agency, and then holds a separate HUD auction for those properties.  These tend to be less frequent than bank foreclosure auctions, but they offer investors incredible opportunities to buy at a discount.  The government tends to be more willing to sell at a discounted rate than the banks are.

      The beauty of HUD auctions is that anyone can find and attend them, for free.  By policy, all of the foreclosed HUD homes are listed by the lending agency on a HUD-approved listing service that requires no purchase or sign-up or any other strings attached.  They are relatively easy to find by searching online; the only real drawback is that each state has its own listing agency, and therefore you cannot search for HUD homes in a national network, for example, only a statewide one.

      Make no mistake, HUD is struggling as much as (or more than) anyone else during this difficult period in the economy and more specifically in the real estate market. They hold too much inventory in a declining market, and they appear to be desperate to unload some of it.  This means a couple of things: huge discounts for buyers, but also negligent care of the properties (they would rather just get rid of it than improve it and increase its value).  The point is this: HUD auctions are a great place to find deals, and there are plenty of them, but be careful you are not buying some dilapidated building which the government considers a burden they can unload on you. 

Let us know what you think. J 

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