So, you want to buy a house and you have a good cred­it score…

The idea of home­own­er­ship has long been one that many amer­i­cans have all but giv­en up on.

These days there are hun­dreds of thou­sands of homes on the mar­ket. 

 How­ev­er there is a Catch 22 sit­u­a­tion going on. 

Most of these fore­closed homes are real­ly not bad deals if you can find a way to get through all the gov­ern­ment red tape.

The biggest prob­lem in pur­chas­ing a fore­closed HUD home is not your cred­it score its deal­ing with fool­ish­ness and igno­rance.

The biggest prob­lem fac­ing the hope­ful first time home own­er is not your cred­it score it is in fact all the red tape.

For exam­ple, if you find a fore­closed home that needs paint­ing on the out­side of the home, even if its a minor job with some peel­ing paint you have to have that job com­plet­ed before the escrow clos­es.

How­ev­er here is the “catch 22” the HUD will not allow the prospec­tive home­own­er to do any repairs until the escrow clos­es.

Which means you can­not get a home loan on one of these prop­er­ties unless you use a spe­cial home loan which is called the 203 loan pro­gram.

Again Red Tape galore.

Banks will not under­write these types of home loans because of all the red tape.

They claim that they want to liq­ui­date these prop­er­ties, yet they make it so dif­fi­cult to actu­al­ly finance one of these homes that banks are not loan­ing mon­ey.

Even the pres­i­dent urged banks to do some­thing about this prob­lem.

But noth­ing hap­pened because the prob­lem is not the banks prob­lems its HUD.

HUD is the problem…

There are vir­tu­al­ly no lenders that want to deal with HUD

The prob­lem for a lender is that hud is so dif­fi­cult to deal with that most banks do not want any­thing to do with HUD because they have this idea that they have to cre­ate rules upon rules that make the sit­u­a­tion even more dif­fi­cult.

Take for instance the mat­ter of inspec­tion of the prop­er­ty, you can­not inspect the prop­er­ty until the util­i­ties are turned on.

How­ev­er HUD will not allow the util­i­ties to be turned on until the buy­er peti­tions and applies for per­mis­sion to do so and that often is also full of red tape.

Catch 22 again. 

You can’t inspect the home unless the util­i­ties are on. 

You can’t turn on the util­i­ties. 

The real fun­ny thing is this HUD wants to sell the home as is.

But they also demand that you fix any prob­lems they iden­ti­fy are a prob­lem.

The prob­lem with that prob­lem is that they want to sell the house as is, but then dic­tate to you what they feel like needs to be fixed.

Again Catch 22.

The bot­tom line is this HUD is bro­ken and per­haps even in some minor cas­es alleged­ly cor­rupt.

If you are con­sid­er­ing being tempt­ed by HUD homes think again because you will most like­ly and alleged­ly waste hun­dreds of dol­lars in time and ener­gy and try­ing to do an inspec­tion when you will most like­ly find it almost impos­si­ble to find a bank that will do a loan on one of these homes.