What’s the Difference between a HUD Home and a Bank Owned Property?

HUD

If you’re considering foreclosure properties in your house hunt in Denver, you’ve likely seen HUD listings as well as bank-owned (REO) properties. While there are similarities in these types of homes, the process for buying them is a bit different. Here’s we’ll give the breakdown on how HUD homes and REO homes differ.

HUD homes actually belong to the U.S. Department of Housing and Urban Development (HUD). This is the organization in charge of public housing and community development. While they offer a variety of programs aimed at helping homeowners avoid foreclosure, if that can’t be prevented, HUD sells the foreclosed homes to recoup the loss.

REO stands for “real estate owned”, but in reality the bank is actually the owner of these types of properties. When the bank forecloses, the lender often attempts to sell the home in a foreclosure auction with the opening bid equal to the loan balance. If the home doesn’t sell, the bank regains ownership of the home.

Both types of properties are typically sold “as-is”, meaning neither owner will be making extensive repairs before selling.

HUD homes are sold through a bidding process. In the initial stage of bidding, priority is given to buyers who intend to use the home as a primary residence. All offers are reviewed at the same time, with the highest bid generally accepted.

REO homes, on the other hand, don’t’ offer priority to owner occupants. Experts recommended providing a good faith-deposit of 1 percent of the purchase price along with your offer. At this time, the bank may accept or counter offer.

Ready to start checking out REO and HUD properties in the Denver area? The experienced professionals at Metrowest would love to help you start the process. Give us a call today!

Ken Blevins

About Ken Blevins

Ken Blevins, CEO of Metrowest Real Estate Services, is a veteran in mortgage and default servicing with more than 24 years of experience in collections, foreclosure/bankruptcy, loss mitigation and real estate disposition (REO). Blevins was an original co-founder of Metrowest in 2003, a Real Estate Brokerage and Services Company focused on the resale, recovery and liquidation of distressed real estate in Denver, Colorado and surrounding metros. Blevins assumed the role of CEO in January 2014 and provides strategic direction and has management accountability for the day-to-day operations. Under his direction, Blevins drives all default management operations to maximize asset value recovery and reduce loss severity through a strategy focused on customer service and state of the art technology. Blevins has 18 years of direct operational experience in all facets of REO Asset Management having managed large national REO Disposition contracts for Fannie Mae, Freddie Mac, Wells Fargo, JP Morgan Chase, CitiFinancial, GMAC Mortgage and other various financial institutions. Blevins specialties include REO asset management, real estate investment, bulk REO acquisitions and distressed asset recovery and liquidation, and he has directed the resolution and liquidation of over ten billion in institutionally-owned residential real estate.

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