NEWS: The Winds Of Change Are Approaching HUD Properties!

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I am a HUD listing broker, which I love, but it also comes with some challenges.

One of those challenges is HUD likes to change the rules occasionally and we all have to learn a new system.  HUD may or may not be changing their whole system soon, but they are making big changes that will certainly affect many of us.

Why Does HUD Change Their Policies?

HUD a part of the federal government and ultimately their goal is to return as much money to the taxpayers.  HUD insures FHA mortgages and when they go into foreclosure they sometimes take over the property from the bank that loaned on the property.  They make changes to their system that are supposed to improve the system and make HUD more money.

The most recent HUD policy change was the reduction of the FHA Insured owner occupant bid period from 30 days to 15 days.  This happened the end of 2013 and was a great move in my opinion, because investors didn’t have to wait 30 days to bid.  Here is much more information on the HUD home bidding process.

What New Changes Are Coming?

Big changes are coming for HUD in most areas of the country.

HUD uses multiple asset managers in different regions of the country to sell their houses.  Those asset managers hire agents like me to sell those homes.  HUD is going to ask for new proposals from asset managers for most parts of the county.

Basically the Southeast, Midwest and Northeast areas of the country will be rebid.  In the new proposal there will no longer be multiple asset management companies in each state or region.  There will only be one asset manager like there was in the old HUD system.

Related: 15 Important Things to Watch For on Your HUD-1 Settlement Statement

When Will These Changes Happen?

HUD was already supposed to ask for a RFP (request for proposal) in March from asset management companies.

They have not asked for it yet, because HUD likes to take their time.  The Western regions were rebid last year and it took a very long time for the process to happen.

They were actually supposed to rebid the West 2.5 years ago, but due to protests and longer timelines it took two years for the rebid process to be completed.  I was recently at a REO conference and their best guess was the contracts will be awarded in September, but I have my doubts.

Why Is This A Big Deal?

In the new system HUD is requiring almost all of the asset management companies to be small businesses.

That means none of the current asset management companies will be eligible.  In fact a couple states are reserved for women owned, small businesses.

Related: Successful Women Real Estate Investors: 3 on 3 Interview Series

There will be a new asset management company with new agents and new policies for most of the country.  I will have to resubmit my application to whoever the new company is.  Hopefully I will still be a HUD listing broker this time next year and if not, then I can buy HUD homes again!

How do you think the new HUD changes will effect investors?

Share your comments below!

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About Author

Mark is Real Estate Broker and investor in Greeley, Colorado. Mark invests in long-term SFR rental homes and also does 8-15 fix and flips a year. Mark started a blog this year that focuses on investing in long term single family rentals.

12 Comments

  1. So I can see how this could be a bit of a cluster as these new companies get up to speed.
    For the consumer are they supposed to be changing anything about the process?

  2. Sharon Tzib on

    You must feel like a CPA getting new rules & regs all the time :) Not sure how this will affect investors – hopefully you can enlighten us.

  3. Karin DiMauro on

    Thanks for the update; it’s nice to have someone sort of “on the inside” providing some insight.

    Here in CT, I’ve noticed there are dwindling numbers of HUD properties available on the HUD Homestore site and that more listings from HUD are headed to Hudson & Marshall. Does that have anything at all to do with the changes you’ve outlined?

    • Maybe it is a regional thing.
      I saw some places going up for auction on H&M in MA last month for the first time since I have been working HUDs the last few years.

      Maybe the big asset managers are trying to liquidate as much as they can if they are going to be losing their accounts. :)

      • Karin DiMauro on

        It does seem kind of coincidental, doesn’t it? And the inventory seems way down in CT as well.

        • I think inventory is down everywhere with HUD right now.
          1. 80,000 loans are in dispute. The lenders want HUD to take them, but HUD says they won’t for one reason or another.
          2. HUD is selling off pools of loans to investors. The last one had 60,000 properties.

          I guess this is coming about because HUD is operating in the red for the first time ever. Not because they can’t sell properties, but because the MI insurance did not cover the losses. I think they would be way ahead to take the properties and sell them in our current market.

          I have no idea why they are selling them at auction. I think they sell just fine without that. They are not doing that here. I think it will be at least 6 months and probably longer before any changes are made so I doubt they are doing it to reduce inventory before any switch.

        • Mark I can’t comment on any other area but I know the properties I saw go to auction were junk.
          I think there were like 4-5 of them. All had been investor eligible for months prior with no takers. There was only 1 I was willing to put in anything as high as the opening bid, and that did apparently sell right before the auction. I THINK all the other ones sold as I casually looked at it once there was nothing to actually bid on.
          If they got anything above the initial bid on most of those then they probably did a lot better than if they kept them on the sight until my <20% of the current (already reduced several times) list price looked good. :)

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