VA - Veterans Administration
foreclosure owned
homes
A VA home is a previously foreclosed home that originally had a VA
loan guaranteeing its repayment. The Veterans Administration provides VA
loans to encourage and provide favorable financing to veterans. After a
VA loan has foreclosed, because of nonpayment of the loan or any other
default by the buyer, then the
mortgage company holding the loan contacts VA to trade the guaranteed
home for the funds to pay off the loan obligation. This exchange now
creates the VA owned home.
These foreclosed properties are listed by local listing agents through the MLS.
Properties for sale may also be viewed on the VA.gov site.
Since you will not be able to purchase a VA home without a real
estate agent, we will get you started on the right path. VA requires
special forms that sometimes look like they were originated in Mars, but
don’t worry, we know how to fill them out and process them for you.
VA offers an incredible loan benefit to non veteran buyers called the
VA Vendee loan. This loan is easy to get, is usually 0 down for a buyer
who is going to live in the property they are purchasing, and the
interest rate is deliciously low. You usually can’t beat it.
HUD - Department of Housing and
Urban Development foreclosure owned homes
HUD, or the Department of Housing & Urban Development, is great
about promoting home ownership. They provide low interest rate
loans, called FHA loans, with low down payments to afford buyers who
want to own a home an opportunity to afford it.
HUD homes result in much the same way as VA homes. The loan is
guaranteed against default and if a homeowner stops making their
mortgage payment, the bank forecloses on the home, then the property
is exchanged for the defaulted loan payoff, and it becomes a HUD
home.
Almost anyone can buy a HUD home as long as they qualify for a
loan and have a certified HUD agent. Don’t worry too much about that
as we have access to all of the certified agents across the country.
HUD always favors the buyer who will reside in the home rather than
an investor. These homes are sold through a bidding process, but
don’t worry we, we’ll help you understand the process. Through the
purchase process, these HUD homes are offered first to
owner-occupants and whatever is left over is eventually offered to
investors.
HUD's
Good
Neighbor Next Door Sales Program gives Law enforcement officers,
pre-Kindergarten through 12th grade teachers and
firefighters/emergency medical technicians the opportunity to
purchase specially designated homes at a 50% discount from the list
price. The homes are usually located in areas that HUD designates as
needing revitalization. In return you must commit to live in the
property for 36 months.
Click here for a list of HUD homes.
Now we are going to discuss distressed sales, which include all
sales whereby the seller is under some duress that would cause
someone to sell a property for a price under market value.
Actually, all sellers are under some pressure to sell their home. If
you have ever been a seller of a home, as we have been many times,
you most likely felt some pressure to get your home sold. But
imagine that you know someone that cannot make next month’s payment
on their home and they're faced with the threat of foreclosure.
Maybe their house has a lot of equity and they need to tap into that
equity quickly for a medical reason or just to survive because of
the loss of a job.
In these situations, people in general will be willing to
sacrifice some of the equity in their home for a quick sale. So if
you are in a position to settle quickly, you become their hero and
the seller rewards you with instant equity. It is a
win-win situation. There are also situations where the seller needs
to sell but does not have any equity in the home to trade for a
quick sale. In this situation, the seller will have to bring money
to the settlement table to satisfy outstanding loans on the
property. Of course, if a seller is having trouble keeping up with
mortgage payments or is falling behind, they are certainly not going
to be in a position to bring any money to settlement. The seller
will have to get permission from the lender to reduce the amount
owed, which lenders will approve, if it is in their best interest.
This type of sale is called a short sale. So, let’s talk about short
sales? A short sale is where the lender agrees to take a lower pay
off to satisfy the note. A short sale will only work if the lender
is convinced that the market value of the property is lower than the
amount owed and that the owners are in financial distress/hardship.
The homeowner has to sell the property for less than the outstanding
balance of the loan, and in turn the lender accepts that discounted
amount as payment in full and will release the property to another
buyer. However, some payoffs are not fully satisfied and it is
usually dependent on the original loan and the type of borrower.
Since the discounted payoff would affect the lender, they would
become participants in the contractual approval process prior to a
home sale contract being ratified.
These types of sales are found in the MLS, word of mouth, and
sometimes advertised for sale by owner. However, to protect yourself
in these difficult transactions, you must have a Short Sale
Specialist (CSP) Real Estate Agent.
REO - Banked foreclosure owned homes
Lenders acquire homes through the foreclosure process. These
properties are referred to as REO properties. REO stands for “Real
estate owned”. Since the property was acquired through the
foreclosure process, it usually means that investors did not find
the property to be an attractive purchase at the amount owed through
resale prior to the foreclosure sale or at the Trustee Sale at the
courthouse. Regardless if the property is worth more or less than
the amount owed to the lender; the lender will try to sell it for
the best reduced price in the shortest amount of time.
REO properties are classified as a distress property because all
lenders tend to sell their REO properties “as-is”. Very few lenders
will back repairs or pretty up a property prior to putting it up for
sale through a real estate company. Any property sold “as-is” can be
expected to sell at a good discount. In light of the
current market conditions, there are an unprecedented number of
foreclosures, and lenders are being forced to cut prices in order to
move homes off their books more quickly, this is a great advantage
for today’s buyer. If there was ever a time to buy an
REO property, the time is now. We have witnessed lenders slashing
property prices by $50,000 or 20-25% of the previous list price.
This is happening all over and in some areas it is artificially and
temporarily suppressing prices.
We recently purchased an REO property that 18 months earlier sold
for over $314,000 and we bought it for $165,000…Wow!
Other types of distressed properties include Trustee Sales and
even homeowners that are defaulting on their mortgages. We’ll talk
about that next.
Trustee Sales - Sales at
the courthouse steps
Anyone who wants to purchase a home below market value can
purchase a home at a trustee sale. This would include investors and
owner occupants. Investors should add trustee sales to their arsenal
for making money in real estate. Any owner occupant would have an
advantage over an investor. An owner occupant is always willing to
bid more than an investor because an owner occupant is not worried
about holding costs, costs to resell and profit as an investor. So
trustee sales are great for prospective home owners.
The majority of trustee sales are the result of the borrower
failing to maintain payments on the loan. If a borrower has stopped
making payments, the lender will initiate actions to get the
borrower to bring the loan current. The borrower will receive notice
to bring the loan current or attempt to make other arrangements with
the lender. If neither alternative is successful, then the lender
will send a written notice of acceleration and give the borrower a
fairly short period of time to cure the default. If the borrower
does not cure the default within the allotted time, then the lender
will notify the trustee. The trustee now gives notice to the
borrower and will give public notice usually by advertising in a
newspaper having general circulation in the area the property is
located. In Virginia, the trustee must advertise no less than once a
day for three days. A copy of the advertisement must be mailed to
the homeowner no less then fourteen days prior to the trustee sale.
The trustee cannot sell any earlier then eight days after the first
advertisement and no later than thirty days after the last
advertisement. The borrowers’ deed of trust will outline the process
the trustee is to follow. If the deed of trust is silent in this
regard then Virginia requires an ad to be run once a week for four
successive weeks. If the property is sold to someone other than the
lender, settlement is required in a very short timeframe, usually
ten to twenty days. As you can see, this can be a very quick
process.
That ends our summary of the most beneficial and attainable types
of pre foreclosures and Foreclosure for the real estate buyer that
will be purchasing a home to live in. The following is a list of
likely loan types that will be most advantageous for Buyers today:
Low to No money down (not necessarily great for homes with
conditions)
VHDA- Virginia Housing Development Authority
FHA- An extension of the Department of Housing and Urban
Development (HUD)
RD- Rural Development
VA- Veterans Administration. Eligibility requirement for an
original VA loan; however, a VA Vendee loan for foreclosures is
still 0 down but the buyer has to pay their closing costs.
Since these loan programs as well as the requirements for loans,
qualifications, down payments, 0 down, closing costs, etc. are ever
changing, please contact us so we can get you in touch with the
right loan specialist for you. Loans are a very personal part of
buying a home and there are as many loan specialists as homes.
We know how to help you!
