Law Suits & Courts

Pending Sales of Government-Owned REOs May Experience Delays

Posted on Thursday, November 4, 2010

Buyers of REO homes owned by HUD may have their closing dates pushed back after this Friday, but the federal agency says any delays will be brief.
Rumors have circulated from various corners of the industry that HUD is planning a moratorium on REO sales expected to close after the end of this week, but a spokesperson for the government agency stressed to, “HUD is not suspending sales of HUD REO properties on November 5th or any other time. HUD’s new asset managers will continue to list and sell HUD homes.”
In June, HUD announced that it was opting for a new plan of action to dispose of its inventory of repossessed property.
The agency decided to split responsibilities for maintenance and marketing of its REOs between field service managers and asset managers, respectively, and hired 55 new contractors throughout the country to fulfill these roles. (Previously both maintenance and marketing duties were handled by a single contractor.)
Officials explained to that HUD has decided to accelerate the transition of HUD homes located in various markets from existing Management and Marketing (M&M) contractors to its new field service managers and asset managers. As a result of this transition, HUD says it may be necessary to postpone and reschedule some closing dates.
Any buyers who have a scheduled closing prior to November 5th, will close on schedule. HUD homes that are under contract and have a closing date after November 5th will transition to the new contractors and may experience a short delay in scheduling or rescheduling their closings.
Buyers experiencing a delay in their scheduled closing will not be assessed any extension fees or penalties by HUD as a result of any postponement in closing attributed to the transition.
In June, HUD said its inventory of foreclosed property from the Federal Housing Administration (FHA) stood at approximately 44,000 homes. That’s up from what the federal agency said was its “usual average” of 35,000 to 40,000 repossessed properties.
The agency says its new disposition structure employing both field service and asset management contractors “will help HUD deal with this challenge” of rising REO numbers.
According to HUD Secretary Shaun Donovan, “These new contracts epitomize FHA’s continuing effort to reduce risk, increase net returns, decrease holding times, and improve efficiency in the resale of its inventory of foreclosed properties.” Carrie Bay DSN

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