Birmingham Michigan and Metro Detroit Real Estate

We have been hearing that the reserves for FHA financing are below the amounts mandated by Congress.   Not a surprise when we see all the foreclosures and HUD homes currently on the market.  I have read several stories about the ways that the Federal Housing Administration (FHA) will tighten their lending requirements to reduce the risk and to improve their weakened financial health.  There has been talk of increasing the down payment requirement, increasing the upfront mortgage insurance and minimum FICO scores to name a few.  Also FHA has cracked down on lenders and pulled the licenses of at least three.  First message - if you are a buyer and "on the fence", this is the time to buy!  More changes are in store and I don't expect the home buyer credit to be extended again - although I would love it.

So these proposed changes are not good news as I work with a lot of first time buyers.  FHA gives buyers an affordable way to own a home at a time when we want to reduce the inventory - too many homes are left vacant to become neighborhood eye sores.  Needless to say, I want to sell homes and make sure loans are given to people who really can afford them - a delicate balance.  

HUD homes can have the connotation of being bad homes and I am always educating buyers that they are just like other foreclosures - only they are FHA loans that have gone bad.  I actually see an advantage to buying HUD homes - the appraised value is established, an inspection has been completed (not to replace a buyer's home inspection) and a property report is accessible on line.  If there are repairs, they can be financed into the offer as Insurable with Escrow - 203(b) as long as repairs are under $5,000.  They allow 3% seller concessions and, in Michigan, $2500 sales allowance and a $100 down payment.

However, on February 12, the $2500 sales allowance and the $100 down payment is being discontinued.  The incentives will be eligible on all owner occupant sales with a bid acceptance date on or before 2/12/2010.  All owner occupant bids accepted after 2/12/2010 will not be eligible for the any of the incentives above.

Like I said, there are many changes coming and we can't count on the home buyer credit being extended past April 30, 2010.  If you are eligible for the current programs now available, this is a Great Time To Buy - and JUMP Off the Fence.

Royal Oak Realtor Michigan Realtor selling Oakland County Real Estate.  TishHouse sells Houses – selling Real Estate Southeastern Michigan with RE/MAX Showcase Homes in Birmingham, Michigan.  Helping People in a challenging market by specializing in Short Sales.  See what my clients have to say about my extraordinary customer service.  Follow me on Twitter..

There are over 9000 HUD homes for sale in Michigan and 3800+ in the tri-county area of Oakland, Wayne and Macomb counties.  These figures and more were discussed by a representative from Michaelson, Connor, & Boul, Inc. (MCB) at a recent HUD seminar held at Realcomp II in Farmington Hills.  Facilitated by several local brokerages that list HUD homes in this area, the seminar further educated local Realtors on the process of online bidding for HUD homes, notification of winning bids, the inspection process, buyer incentives and more.

 For those that may not know what a HUD home is, basically they are foreclosures on FHA-insured loans.  When a lender submits a claim against the FHA insurance fund, the property is conveyed to HUD.  HUD then turns the property over to MCB who maintains and sells these properties in accordance with HUD guidelines.  Anyone can buy a HUD home but it must be done through a licensed broker registered with HUD (agent employed with a licensed broker).  All bidding in done on-line at the MCB website. 

Here are some basic things to know about HUD homes and the process of bidding.  However, it is best to contact a Realtor with experience in the process:

 Buyers must have a pre-qualification letter from a lender or proof of cash funds in the amount of or greater than the purchase price prior to submitting the bid

1. Owner/occupants may bid the first 10 days of listing a HUD home; they must certify they will live in the home for 12 months; and cannot have purchased a HUD home as a owner/occupant within the last 2 years.
2. Investors may bid after the owner/occupant period has ended and may purchase as multiple HUD homes as they want and as often as they want
3. Each Friday new listings are featured on MCB's website www.mcbreo.com and entered in the local Realtor's multiple listing service (MLS).
4. Homes can be viewed before bidding by contacting a local Realtor.  A link to a broker's office that is licensed to sell HUD homes is on the MCB website.
5. If a home is relisted or goes back on the market, there is a 5 day period for owner/occupant bidding before investors can bid
6. Daily cut off time for bidding is 4PM EST and bids are reviewed on the next business day following the deadline.
7. The highest NET to HUD is generally the winning bid which may not be the highest GROSS offer
8. Accepted bids are posted on the MCB website after 4PM EST under "Bid Results".  MCB also endeavors to notify the bidding agent of an accepted bid.
9. Completed original signed sales contract and addenda must be delivered to MCB within 2 business days of accepted bid.
10. A home inspection is recommended after contract is signed and purchaser has 15 days to conduct one.
11. Buyer must activate the utilities via a request form faxed to MCB for inspection
12. For defects not disclosed by MCB, a buyer can cancel the offer
13. Selling broker retains the earnest money deposit:  Minimum $500 for offers under $100K and $1000 for offers over $100K
14. For owner occupants, HUD will pay $2,500 in closing costs for offers over $25,000
15. $100 down payment financing is available on most owner/occupant offers if financed through FHA approved lenders. 

There are other benefits for owner/occupants.  For law enforcement officers, firefighters, emergency medical technicians and teachers have an opportunity to purchase homes under the Good Neighbor Next Door (GNND) program.  This applies to communities designated as "revitalization areas" and to qualify for the program, they must work in the area where they purchase.  HUD provides a substantial incentive in the form of a fifty percent discount off the list price of eligible properties.  However, when bidding on these homes, buyers must qualify for the full amount. 

For more information on purchasing HUD homes and qualified representation when viewing and bidding on HUD homes, please contact me.  I am well versed in the process including a market analysis of the area where a HUD home is listed, referrals for lenders, home inspectors and more.

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HUD Realtor selling Real Estate in Southeastern Michigan.  TishHouse sells Houses - selling Oakland County Real Estate with RE/MAX Showcase Homes in Birmingham, Michigan. Helping People in a challenging market by specializing in Short Sales. See what my clients have to say about my extraordinary customer service.  Follow me on Twitter.