Raleigh NC Real Estate

HUD Process

The following has been reprinted from http://www.hmbireo.com for your convenience.

General Public Bid Period.

At the conclusion of the 10-day Exclusive Listing Priority Period, all general public bids will be accepted. These bids will be reviewed and the highest acceptable net bid to HUD will be selected.
In the event the property remains unsold after these bid openings, daily bids received by 11:59 p.m. will be reviewed and results will be posted the next day at 1:00 p.m.

Bids received on the same day shall be considered to have been received simultaneously.

Friday, Saturday and Sunday bids will be reviewed simultaneously on Mondays at 1:00 p.m., and the highest acceptable net bid to HUD will be selected.

In the event the property remains unsold, the bids (Owner-Occupant and General Public) will be reviewed and posted daily at 1:00 p.m. and the highest acceptable net to HUD bid shall be selected. This listing will remain in effect until the listing has been sold or withdrawn from the market to be reanalyzed. Bids must be completed and confirmed on the Internet before 11:59 p.m. in order to be valid for that day and will be opened the next day excluding Friday, Saturday and Sunday which will be opened on Monday.

- Contract must be submitted within 48 hours
If your bid is acknowledged, your broker must submit a correct HUD Sales Contract, along with other required forms and Addendums signed by you, to the HMBI Regional office within 48 hours. You may be required to submit proof of financing commitment or cash to close, along with other items. You should be working with your broker to put the required items in place before you bid on a home, so that you are ready when the time comes.

Closing on a HUD home

• Closings are 45 days for Alaska, Idaho, Oregon and Washington, South Carolina, North Carolina, Virginia and West Virginia. After your contract has been received correctly, it will be signed by HMBI on behalf of HUD and returned to your agent along with a contract acceptance letter. For Alaska, Idaho, Oregon and Washington, North Carolina, South Carolina, Virginia and West Virginia this letter will give you up to 45 days to close. Once you are ready to close, you and your agent must schedule the date with the closing agent indicated on the letter, who also receives a copy of your contract. HMBI does not set the closing date; it is up to you.
• If you use the HUD closing agent, HUD pays their fees. You may use your own agent, but then you must pay the fees. If you use your own closing agent, they must work with the HUD agent on some legal items.
• HUD will pay some closing and sales commission costs Generally, HUD will pay up to 5% of your broker commission cost. In addition, HUD will pay up to 3% for standard closing cost items (excluding the closing agent fee which is paid for separately). These items are designated by the buyer and may include discount points, loan fees, title costs, surveys, and other items. HUD will also generally pay any outstanding seller costs such as outstanding tax or utility bills which relate to HUD’s ownership.

Return of Earnest Money.

The following provisions are applicable in all instances except those where HUD is unable or unwilling to close the sale, in which case the entire amount will be returned.

Investor Purchasers:

* Uninsured Sales: 100% of the deposit will be forfeited to HUD for failure to close, regardless of the reason.
* Insured Sales:
o 50% of the deposit will be forfeited to HUD for failure to close if the purchaser is determined by HUD to be an unacceptable buyer.
o 100% of the deposit will be forfeited to HUD if the sale fails to close for any other reason.

- Owner-occupant Purchasers:

Return 100% of the deposit when:

o There has been a death in the immediate family (purchaser, spouse or children living in the same household).
o There has been a recent serious illness in the immediate family that has resulted in significant medical expenses or substantial loss of income, thus adversely, affecting the purchaser’s financial ability to close the sale.
o There has been a loss of job by one of the primary breadwinners, or a substantial loss of income through no fault of the purchaser.
o For an FHA insured sale, HUD (or a D.E. underwriter) determines that the purchaser is not an acceptable borrower. For an uninsured sale, the purchaser was pre-approved for mortgage financing in an appropriate amount by a recognized lender and, despite good faith efforts, is unable to obtain mortgage financing. “Pre-approved” means a commitment has been obtained from a recognized mortgage lender for mortgage financing in a specified dollar amount sufficient to purchase the property.
o There is other equally good cause, as determined by HMBI, in keeping with the spirit and intent of the above policy.

Return 50% of the deposit when:

For an uninsured sale, despite good faith efforts by the purchaser, there is an inability to obtain a mortgage loan from a recognized mortgage lender.

Forfeit 100% of the deposit when:

o No documentation is submitted.
o Documentation fails to provide an acceptable cause for the buyer’s failure to close.
o Documentation is not received by HMBI no later than close of business on the tenth (10th) day following cancellation of the contract.

-Vacant Lot Sales:

The purchaser is considered to be an investor and instructions pertaining to investors will apply.

Extensions of time
ALL SALES ARE EXPECTED TO CLOSE WITHIN THE APPLICABLE TIME FRAME IDENTIFIED ON LINE 9 OF THE SALES CONTRACT.

Closing Extension Request: If the closing is not expected to occur on the specified date on line 9 of the HUD Sales Contract 9548, the Broker should contact HUD’s Closing Agent at least two weeks prior to that date to request an extension.
HMBI, as HUD’s Representative, may grant an extension of closing time and, if approved, each extension will be for a period of fifteen (15) days:

* Submit the “Request For Extension of Closing Date” (Extension Request form) and all the required supporting documents to HUD’s Closing Agent prior to the expiration of the sales contract.

* Documentation submitted with the extension request must establish that a closing can reasonably be expected to occur within the extension period.

* The extension request must be accompanied by a cashier’s check, money order or other certified funds in the appropriate amount and made payable to HUD. The fee is based on the Contract Sales Price:
Contract Sales Price equal to or less than $25,000 Extension fee is $10 per day ($150)
Contract Sales Price of $25,001 to $50,000 Extension fee is $15 per day ($225)
Contract Sales Price over $50,000 Extension fee is $25 per day ($375)

* The initial 15-day extension will be provided for owner occupant purchasers, at no cost, if documentation is provided indicating that proper and timely loan application was made, that the delayed closing is not the fault of the purchaser and that mortgage approval is imminent.

* The extension fee will be retained by HUD. In the event that the purchaser closes prior to the end of the extension period, the unused, prorated portion of the extension fee will be credited to the amount due at closing.

* The approval of an extension does not obligate HMBI, as HUD’s Representative, to grant future extensions.