The beginner's guide to government foreclosures


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The beginner's guide to government foreclosures

  1. 1. | Foreclosure Deals | | The Beginner’s Guide to Government Foreclosures Contents Introduction ..……………………..1 HUD Foreclosures ……………….2 VA Foreclosures…………………..3 USDA Foreclosures………………3 Contact Info…………………………4 Owning a quality home for a fraction of its market value is what likely drew you to foreclosures. However, while public foreclosure auctions are the most common type of foreclosure sale they may be too fast- paced for some buyers. If this option isn’t right for you, Government foreclosures (GOV) might be better. GOV foreclosure homes are foreclosed homes owned by government agencies obtained in one of two ways: (1) The previous owner defaulted on a government loan used to finance the property, or (2) The previous owner failed to pay property or income taxes. This guide will introduce you to the different agencies that may have GOV foreclosures for sale in your area. [Volume 1, Issue 2]
  2. 2. HUD Foreclosures 2  HUD pays the default: The process begins when a homeowner with an FHA backed loan defaults on their mortgage. After the home has been foreclosed on, HUD pays off the remaining debt on the homeowner’s FHA loan. Now that the lender has been reimbursed, ownership of the property is transferred to HUD.  HUD holds a silent auction: The silent auction is the most common way that HUD sells their foreclosed properties. During this time period, HUD approved agents will be accepting sealed bids on the property. First time foreclosure buyers or buyers inexperienced in GOV foreclosures may want to hire HUD approved real estate agents to make their bids for them.  The property goes to the highest bidder: At the end of the silent auction period, the foreclosed property is awarded to the person who bid the most. Do not be discouraged if your bid is rejected. If you researched the home and remembered not to bid over your maximum pre-set amount, you’ll know that bidding any higher wouldn’t have been worth it. The Department of Housing and Urban Development (HUD) has many GOV foreclosed homes for sale. Among homes available in HUD foreclosure listings are home foreclosures from the IRS, FDIC and Customs. A common source of HUD foreclosures are when an owner defaults on a loan from the Federal Housing Administration (FHA). When this happens:
  3. 3. 3 The Department of Veterans Affairs (VA) sells GOV forecloses that end up in the VA’s possession as a result of the owner defaulting on a VA backed loan. You do not need to be a veteran to buy a VA foreclosure. Non-veterans can also be eligible for VA loans, such as the VA Vendee Financing Program, when buying a VA foreclosure. In a VA foreclosure:  The homeowner defaults on their VA loan: Like in most other real estate foreclosures, the foreclosure process begins when the owner falls behind on their VA loan payments and defaults. If the owner fails to pay their default, obtain loan modification or arrange with the lender to sell their home as a short sale during this time, the lender obtains ownership of the home.  The VA sells the home: VA homes will usually sell to the public at 30 to 50 percent off their market value. Keep in mind that a VA home may be in better condition than other foreclosed properties. This is because the VA takes an active part in preparing their foreclosed properties for sale. What’s does that mean? For more terms and definitions, check out’s glossary page: lossary.php VA Foreclosures USDA Foreclosures You may be thinking to yourself, “Wait a minute. Why would the United States Department of Agriculture (USDA) sell homes? Aren’t they responsible for regulating farms and food safety?” While this is primarily what the USDA does, they also award families a Rural Development loan. As with other GOV foreclosures, if the homeowner defaults on their loan or taxes:  The lender forecloses on the USDA home: If the homeowner doesn’t pay their back debt or come to another arrangement before a notice of sale is issued, the home goes into foreclosure. The homeowner may have as much as five business days prior to a foreclosure sale to pay what they owe. Failure to pay certain taxes may also lead to government seizure of the property.  The USDA pays the default: The USDA will pay the overdue balance on the homeowner’s Rural Development mortgage loan in order to obtain official ownership of the foreclosed property. The idea is to pay the default balance now and hopefully make up the rest in a foreclosure sale of the property.  The USDA sells the home: The USDA will make the foreclosed property available for sale by the public. USDA properties are perfect for foreclosure buyers interested in living in or flipping homes in rural communities. USDA homes are particularly ideal for low to moderate income families, exactly the people the USDA approves for loans in their Rural Development plan.
  4. 4. 4 Like banks and lenders, government agencies are not in the business of selling real estate. They make no money off these properties while they are in their possession. They want to sell off these homes quickly. Check with each organization for property listings, or you can use to find them all in one place. Always remember to check our blog for the latest news and updates on GOV foreclosures. foreclosures/ Foreclosure Deals 12550 Biscayne Blvd, Suite 306 Miami, FL 33181 FAX: 1-347-402-6620 If it’s not a deal, we won’t list it here! Find us on the Web: