Should this EMD have been lost to HUD?

Question

As an investor in HUD properties, the expectation is always to lose an occasional deposit, but this time?
My cash offer was accepted with 45 days to close. 45 days later, HUD could not close. The title officer said HUD did not have ownership of the property because the foreclosure had much incomplete documentation and the property must be returned to the bank to have the discrepancies fixed and re-foreclose. OK, got into one of those, so now what. The RE broker tells me HUD will allow extensions until the situation is straightened out or cancel and get my deposit back. Doing extensions ad infinitum seemed unreasonable so there seemed to be no other alternative than to go with the cancellation. A week later HUD says, sorry, you're an investor--no refund. Love to hear your thoughts on this one.

Eric Blackford · Answer

Aaron, are you allowed to contact the HOA directly? If so, I would imagine that they are just as eager to start having the house maintained again which, logic would dictate, that they should work with you as far as the fees are concerned. I can see paying the back fees but $10k in interest? That should go away.

Account Closed · Answer

Dave, fight it with the asset manager and then take your documentation to your local hud office.   On average it takes us about 5-10 hours to recover a deposit.     More than likely when the cancellation was put in, you/your agent didn't provide the correct information and assumed they just had it.

I'd love to take a class action against the AMs for hud and see exactly how many deposits they take that they shouldn't of.     I'd wager they take in a million or more a year.

I just got a contract back at a roughly 25k purchase price.   The HOA says hud owes 16k in back fees, 10k of which is interest on the back dues.....Anyone want to guess whats in my future *groan*.

Sara Oubre · Answer

Chris, 
When they gave you first right of refusal did you purchase the property at the original price you had gotten the contract on? We are facing this situation currently with a HUD home, and after 3 contract extensions they have still not paid the lien in place on the property. We received a one line email yesterday saying they are taking the property off the market, and we will be granted first right of refusal. I am worried about all of the things that could go wrong with this situation, but hope that it will work out for the best in the end.

Chris Calabrese · Answer

I just had the same thing happen.  They had title issues, and right before the contract expiration, they had to reconvey the property to the bank and cancel.  In my case, they gave the earnest money back, presumably because they had to cancel, not me.  I would think that you could call the asset manager and explain the situation and get your money back.

In my case, they actually called back a month later and had the title issues resolved and gave me first right of refusal.  I ended up buying it and just closed this week, so maybe it's worthwhile to try an extension or two and see what happens.