What is Happening to HUD Properties?
Several years ago, then Secretary of HUD, Shaun Donovan, announced that HUD was getting out of the foreclosure business. Having purchased over 100 HUD properties myself, I found this to be an easy to understand yet very significant announcement.
It was easy to understand, as HUD-foreclosures are a result of an FHA insured loan that went bad. Many of them did as, in an effort to increase home financing efforts, FHA lowered their credit requirements, increased the amount that they would lend and still only required 3.5% down.
It was significant because it meant that now all of the Government Sponsored Entities (Fannie, Freddie and FHA) were in a non-performing-note selling mode. Adding that inventory to the large bank inventories meant significantly more note buying opportunities.
The role out of HUD note sales did not go as smooth as one would like but that can be expected when a large government agency is making a significant change. Even as late as mid-2013, HUD was not pricing all of these non-performing notes to the market’s pallet.
It looks like they have now figured out the market a little better as all of the 23,203 HUD ($4 Billion) non-performing loans were sold to investors on June 11 2014. These notes will trickle down to individual investors over the next few months as the “big pool buyers” will re-work and then re-sell some loans as re-performing loans while other loans will simply be sold right away as non-performing loans.
Although some individual markets will not see a significant reduction in HUD-foreclosed property inventory yet, nationwide it will decline. A quick look on the HUD website today only had 5 properties listed in my surrounding counties.
Time to start shifting gears by learning a new way to acquire property. HUD investors possess many skillsets, such as valuating property and making offers, which are used when purchasing non-performing loans.
~ Joseph Varnadore
Want to learn more? Be sure to check out the Educator Page for Eddie Speed and NotesSchool where Joe is one of the very experienced investor instructors. And be sure to save the dates in January when NoteSchool’s founder, Eddie Speed will be in Kansas City as you will not want to miss either event.
Meet Joe Varnadore:
Joe Varnadore invested in his first property at the age of 19, and has since created, brokered, bought, and sold more than 10,000 real estate notes on both residential and commercial properties. As an author, speaker, and trainer for the past 25 years, he believes that there has never been a greater opportunity for real estate investors to use non-performing notes to acquire properties and seller financing to cash out.