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.