Got some interesting information from my local loan officer from Bremer Bank. Bremer is a regional bank based in St. Paul, MN. If you buy HUD homes with bank financing, this could affect your future purchases.
HUD REPO homes and changes to appraisal guidelines.
Bremer Bank has been made aware by HUD that homes owned by HUD and under contract by a buyer will no longer be able to use the current appraisal originally ordered by HUD. HUD is now considering a lender to be a third party and will require a new appraisal to be done. This is important as at times, buying a HUD owned home requires repairs to the property that would normally have to be done prior to the sale. When using the current appraisal for FHA loan, borrowers could get by without making the repairs at their own expense and risk prior to the close. This could impact borrowers trying to buy a home. On another note, any property that is in foreclosure status, must have all utilities turned on prior to the appraiser coming out, to be eligible for secondary market financing. I know this can be complicated for HUD owned homes and sometimes carries a high degree of risk.
The new policy has been in effect for 3-4 months. My take is that it will further discourage First time/Owner Occupants and give more opportunities to investors with the additional costs and hoops to jump through to get it closed
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