HUD auction fraud

15 Replies

Owner occupants get priority over investors in the HUD auctions. That means OO's can bid thousands less than investors and still win the auction.

The problem is that I sometimes get beat by an "OO" who really turns out to be a flipper/rehabber. It's not hard to notice when the "OO" puts the home up for sale again a couple months after winning the auction. Not only does this create an unfair advantage, it is fraudulent.

Just looking at my records now, I see in March one where I bid $30507, but an "OO" bid $26500 to beat me. And now this home is for sale. Craigslist and FSBO sign.

Anyone know how (and to whom) to report this activity to hopefully put a stop to it?.

I myself am writing offers on HUDs and thinking to myself there is no OO who will be buying this rundown place needing a rehab. If anything it will be a first time investor.

HUD should allow bidding without discrimination.

Or, we can just leave the HUDs for the newbies....

in response to your question, start here-

Jon, that is a fairly common occurrence with HUD properties, Here in GA just like you I have seen it quite a bit.

You can report it to the contractor who handles HUD auctions in your state, over here is PEMCO. The thing about it is that they choose to investigate, prove it and then prosecute. I don't know if they would go through the hassle considering the volume they deal with.

If it's someone that does it once that's one thing, if the same person is doing it over and over then that's another...

How did this work out for you?

I'm facing the same problem. Someone is winning properties in my area during the owner-occupant bidding round, but not living in them, just renting them out, and not being a good landlord, either. It's really dragging things down.

I did I found this website for the HUD 'Office of Inspector General', which accepts fraud complaints. Anyone ever try this?

I would appreciate any advice. I'd also like to know if there's any way to look up the winning bids after the auction ends.

I'd say to file it with HUD and the asset manager.
Let them know you're getting beat out on these deals
and if they're not going to enforce the rules, they should
let you know so you can do it too.

Then they'll be on the hook if they don't take any action.

The govt moves pretty slow but they tend to catch the
sneaky people eventually. And when they do, watch out.

There tend to be some pretty stiff penalties for willful
misconduct on those deals. If they do it once, they can probably
argue that things changed. But if they're continually
buying houses as an OO, good luck trying to argue that.

Thanks for the response! I'd like to complain, but I'm not "in the know", HUD is not in my area of expertise. I see these homes bought during the first 10 days, but then there's no longer any info on the website. Is there some way to absolutely verify that they were bought as owner-occupied before I go shoot my mouth off to HUD?

Yep, I'm a Broker/Investor here in Tucson. The agent and the "owner" need to sign an affidavit outlining the fact that they will be residing in the home for 12 mos after the sale under penalty of law. The penalty is SUPER big. Their broker signs, the agent signs, and the "owner" signs as well. The fines can be up to 250k and ten years in the pokey. Where to report that fraud is in the State you are in Department of Real Estate. They will have an investigator look into it and if true, the Attorney General will get involved... and let the fun begin!

if the agent involved is with a decent company, a letter to the broker mentioning a possible complaint to HUD might at least get the brokers attention, who might explain to the agent just how bad the are screwing up,,possible a new agent, no agent I know would even consider doing it because of the fines

Sorry to resurrect such an old thread but has anyone ever made a fraud complaint to HUD or heard about one being made or heard about someone being busted for passing themselves off as an owner occupier? I never had and yet I have seen this fraud happen frequently over the years.

I just missed out on a juicy HUD foreclosure that I had my eye on for over a year waiting for it to come up for sale. Someone bought it out from under me during the owner occupier period but doing some research I'm pretty sure this guy is not going to occupy it.

He already owns a home on which he signed a Homestead affidavit for a loan just one month prior to purchasing the HUD. I'm still watching it, him, and his other property for some solid evidence.

If I don't see anything concrete before the 60 day move in requirement I am going to hire a private investigator to gather evidence. Yes I am that pissed off at these people committing fraud and getting away with it. If I get evidence and HUD doesn't do anything about it (unfortunately they state specifically that they will not give you the status of your fraud complaint - how convenient) then I will consider suing him myself for consequential damages.

@Robert Steele

The buyer signed a form stating that they will occupy for 1 year. The reality is there is no enforcement division within HUD other than you can only purchase as an owner occupant once every 2 years. Feel free to make a complaint but it will go nowhere fast if at all

Your lawsuit will go absolutely nowhere.  How were you injured as there is no guarantee that you would get or even have the opportunity to obtain the property?

While it is frustrating it is reality

Awh, but you can write to each of your Congressmen and Senators with the complete, clear details and HUD will have to answer the letters these folks send on to HUD. Takes time and effort from HUD to answer Congress/Senate. This will make HUD start watching it a little more, push their contractors to watch it...and sometimes they will take an enforcement action on the complaint house to please the Congress/Senate folks. Write to EVERY rep for your state, not just one or to:) Keep HUD busy! And et HUD know you are watching them! After all its Congress who required to owner occupant period first.