HUD is behind due to an influx of foreclosure properties, but a sale shouldn't take five months. (Photo Credit: CC BY-ND/The Backyard Wealth Blog)
The U.S. Department of Housing and Urban Development manages Section 8 programs that provide rental housing assistance to private landlords on behalf of registered low-income households across the country. Unfortunately, buying a HUD home can be difficult, as one Bankrate.com reader named Bea notes. She tells The Real Estate Adviser Steve McLinden that she may lose her $1,000 cash deposit in what appeared to her to be HUD fraud.
Bea’s HUD dilemma
According to Bea, HUD accepted Bea’s $1,000 cash offer on a HUD home in November 2010. However, the sale still hasn’t closed due to what was explained to her as “an expired notary seal.” In order to prevent the deal from dying – and Bea from forfeiting her $1,000 – she must request an extension every two weeks, at her own time and expense. All Bea wants to do is complete the sale and live in the home.
Under new management
McLinden explains that while bureaucracy is the most likely cause of Bea’s trouble, the expired notary seal excuse doesn’t seem right, particularly after five months. In general, closing on HUD homes takes 60 days, while all-cash deals close in half the time. If a paperwork problem produced the notary seal problem, it could easily be remedied.
What Bea didn’t bargain for is that HUD is adopting a new system of management and marketing (M&M), according to McLinden. Pushing out foreclosure inventory is top priority, and this has reportedly slowed down the HUD process considerably. However, real estate agents attest that it still shouldn’t take five months to close, particularly since HUD foreclosure deals are less complicated than standard mortgage deals with Fannie Mae and Freddie Mac.
What to do if HUD has happened to you
Housing and Urban Development have numerous policies that apply to a consumer’s earnest payment – the good-faith cash deposit toward the purchase of a HUD home – that can illuminate how to proceed. Visit the HUD’s REO management page for information regarding transactions in your state, as well as local office contact numbers. If after following standard complaint channels, you believe that fraud may have occurred, McLinden advises emailing the Office of the Inspector General at HOTLINE(at)hudoig.gov.
Sources
Wikipedia entry for earnest payment
Wikipedia entry for Section 8 (housing)
