It’s a residential property obtained by HUD (Dept of Housing and Urban Development) as a result of a foreclosure action on an FHA-insured mortgage. HUD assumes responsibility pays off the bank loan or a financial institution, then continues with the sale of the property. HUD is a governmental agency that is linked to FHA, they do lots of things… but for your purposes they take back homes that had FHA loans on them.
The Forfeiture of Earnest Money Deposit” document clearly states that if an individual buyer submits a contract to purchase a HUD home and does not perform, the 5 percent deposit will be retained by HUD on a non-refundable basis. So it sells HUD home foreclosures through approved real estate brokers who advertise themselves as approved HUD brokers.
Another important difference in buying a HUD home vs. a non-HUD home is that there is no option period, and all foreclosed homes are sold as-is. But once the title-holder fails to live up to the economic obligations that are expected, the mortgage holder then forecloses and it becomes a HUD property.
HUD’s Dollar Homes initiative helps local governments to foster housing opportunities for low to moderate income families and address specific community needs by offering them the opportunity to purchase qualified HUD-owned homes for $1 each. There is also a special program for Fannie homes that requires little down and no mortgage insurance (that’s a biggie).
HUD employees and relatives of HUD employees are eligible, but must receive written approval from the Director of HUD’s Office of Single Family Asset Management in order to purchase a HUD-owned single family property. All financing options are available for HUD homes, including FHA , VA , and conventional financing.