Housing and Urban Development is a government department affectionately known as HUD. The Federal Housing Authority (FHA) makes loans for houses--usually in the lower end of the market range and for buyers with marginal credit. When a purchaser quits making payments on an FHA loan and the foreclosure process goes though the house is owned by HUD.
HUD sells its houses online though a bidding process. Persons who will occupy the home are given priority over investors. The house is listed with a realtor. You can have another realtor (HUD certified) represent you. Also you must be preapproved by a lender for a loan. (This is not a quickie loan approval over the internet.) You can look at the interior of the house. You can have inspections made. Sometimes HUD homes are good buys and sometimes not. If a house stays on the market HUD lowers the price until it sells.
It is good to get your realtor to do a market analysis on the property to determine a likely worth of the house before you bid. The house is sold "as is", that is, HUD will not make any repairs. You must put up $1000 Earnest Money for most houses. Really cheap houses $500. You are notified promptly after the online bid and you have only a short time to get all of the paperwork to HUD. Once the paperwork is reworked a few times, then you have a deal and it is pretty much like other home sales from here on except that you will use the HUD designated title company. It is possible to get a loan to fix up 30% of the value of the home through an FHA loan program. (It is possible, but complicated).
The Federal National Mortgage Assoc. (FNMA) is known as Fannie Mae. FNMA has adopted the name Fannie Mae as the official name. It started out associated with the federal government. It was an independently traded company on the stock exchange until the real estate debacle in 2007. Now you and I own a substantial portion of the stock. I could rant here for a while, but it would not do any good. Freddie Mac is Fannie Mae's little brother. You and I own a share of Freddie also.
Fannie and Freddie foreclosed homes are treated similar to other bank owned homes which are discussed in the next part.
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