When someone with a HUD insured mortgage cannot make their payments, the lender forecloses on the home; HUD pays the lender what is owed; and HUD takes ownership of the home. Then it is sold as quickly as possible at market value.
Almost anyone can buy a HUD home. It is even possible to purchase as an investment, though priority is given to owner occupant purchases. A real estate agent must submit your bid.
HUD offers community and faith-based nonprofit organizations the opportunity to purchase HUD homes at discounts of up to 30 percent off the appraised value, favorable FHA insured mortgage financing terms, and also opportunities for down payment assistance programs. Teachers and law enforcement officers qualify for 50% discounts in certain situations.
Homes are sold as is, and the new owner becomes responsible for repairs and upkeep.
HUD Homes Information
See also: Housing Guide