HUD Turns Gulf Coast REO Into Affordable Opportunity
The Department of Housing and Urban Development said it is offering families displaced by the Gulf Coast hurricanes the opportunity to buy HUD-owned properties at a 10% discount off the property's fair market value.
So far, HUD has assisted those displaced or rendered homeless after the hurricanes providing rental housing in HUD-owned properties in South Carolina, Georgia, Florida, Kentucky, Tennessee, Arkansas, Oklahoma and Texas. The new program, which will take off within the next few weeks, extends that assistance one step further offering these families the option to purchase the homes they currently occupy.
According to HUD, the initiative will make available to hurricane evacuees up to 20,000 properties.
"Our goal through this housing assistance initiative is to give families who have been impacted by the disaster a chance to restore stability to their lives," said federal housing commissioner Brian Montgomery.
In addition to the 10% discount, HUD said it is offering to help current tenants pay for property repairs "by funding a repair escrow equal to 15% of the contract price."
Among the loan types available are Section 203(h) financing for disaster victims that allows for 100% financing and Section 203(k) financing that combines both purchase and rehabilitation financing into one loan.
In addition to making homeownership opportunities available to evacuees already occupying HUD-owned properties, the department is establishing a nationwide sales initiative providing discounts and preferences for hurricane evacuees seeking housing anywhere in any of the 50 states.
HUD said that for a period of five days - starting the week of May 1 - "almost all" new properties listed for sale by HUD will be offered exclusively to hurricane evacuees at a price that is 10% below fair market value.
Evacuees who qualified for FEMA opportunities will be required to submit a purchase offer though a licensed real estate broker. HUD will enter into a purchase contract with the buyers after verifying their FEMA registration numbers. If more than one offer is received on the same property, HUD said it will select the successful buyer through a lottery drawing.
Sale terms include that of approving buyers for a purchase price at 90% of the appraised value. Buyers are required to finance the purchase using either an FHA insured mortgage or cash.
Also, HUD will pay all reasonable and customary closing costs in connection with the sale not to exceed 5% of the contract price and the fee to real estate brokers.
Especially first-time buyers, as well as all prospective buyers, will be encouraged to participate in a homebuyer education program. Terms and conditions include that to be eligible for the 10% discount or the 15% repair fund for current occupants, "the buyer must agree to occupy the property as a primary residence for at least 12 months."
All current occupants of the HUD properties will be notified by mail of the appraised value, contract price and other terms of sale. Interested parties are required to notify HUD of their intention to purchase the home no later than 60 days prior to the expiration of their lease term. However, HUD said they might exercise the option right away.
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