HUD Homes, A Complete Misnomer

Home buyers might find buying foreclosed homes a great opportunity to buy Arizona homes at ultra-low price. Although foreclosures are truly an awful experience to homeowners, investors find the present state of the country’s property economy a great opportunity to buy low-priced properties as investments now that there are thousands or even millions of banks and HUD foreclosed homes for sale in the country and still rising.

Bank foreclosed homes, yes, but how about HUD homes? By definition, HUD or Housing and Urban Development is a United States Cabinet department in the Executive branch that functions under the federal regulations that oversees government foreclosures. It was founded as a Cabinet department in 1965 as part of the “Great Society” program of President Lyndon Johnson. The main purpose of the said department was to develop and execute policies on housing and metropolises.

According to RealtyTrac, calling a home an “HUD home” is a misnomer of sorts because HUD is an administrative agency. RealtyTrac, the leading online marketplace of foreclosure properties, reiterates that HUD is not a lender but a Cabinet-level agency that supervises a number of federal agencies and programs like the Federal Housing Administration or FHA that insure home loans for qualified areas in the country.

Since the Mortgage used to acquire these homes was insured by the FHA, there are a set of guidelines that should be met ahead. First, these homes must adhere to FHA’s guidelines in order to qualify for the FHA insurance program and where your lender is endorsed to tender FHA insured loans. But why do they call it a that way? What happens is that when a home is purchased using an FHA insured loan, then probably why it is called a ‘HUD home.’ When the foreclosure process is complete and FHA pays off the lender of record, the property does to the original owner – HUD. Since FHA is under HUD, HUD is responsible for all FHA insured loans.

In short, the moment homes enters a foreclosure process with FHA which is actually under HUD, the home becomes the property owner and has all the right to offer it for sale in order to restore the loss from the foreclosure.

Take note that not all foreclosed homes are HUD foreclosures. Foreclosed homes can be HUD foreclosures if the mortgage was insured by FHA and the owner defaults on their loan. These homes differ exactly from other homes for sale on the market particularly in the seller, and home buying process, including negotiations, price, and contract signing.

So, if you are interested in buying an HUD home, look into some web sites that list HUD homes. Visit Phoenix AZ Homes for Sale. Then make sure that you’ve got one qualified Realtor who will help you with finding affordable HUDHomes for Sale in Arizona.