The Department of Housing and Urban Development has announced that it is modifyng the definition of “foreclosed”. The government agency has stated that houses with existing code violations will also now be under the same category as HUD foreclosures for sale.
This means that even pre foreclosure homes can be classified as foreclosed if their owners are 60 days or more behind in their mortgage payments. Homeowners who are also delinquent in paying their taxes for at least 90 days can see their dwellings classified as foreclosed.
The federal agency also announced that the definition of “abandoned property” will now include houses wherein no tax or mortgage payments had been made by the owner for 90 days or more. Any type of residential property, including repossessed homes, determined to be uninhabitable by code enforcement inspectors and with its owners not having taken any corrective action within a 90-day period, will also be classified as abandoned.
According to the federal department, the expansion of HUD foreclosures for sale definitions will help neighborhoods rehabilitate, re-sell and acquire abandoned and foreclosed properties under the Neighborhood Stabilization Program (NSP) and will help alleviate blight in neighborhoods that were hardest hit by the housing crisis.
The HUD announcement came just after reports were made that local communities have spent little of the $4 billion reserved under the NSP program to purchase home auctions for sale and distressed dwellings in their neighborhoods.
It has been reported that as of the middle of March 2010, less than 40% of the NSP money has been obligated. The term obligated means that a contract to purchase an abandoned or foreclosed home has been made by a municipality. Local governments will loss their share of the NSP funds that have not been committed to a purchase by September 2010.
Concerns over the NSP money not being used as it should be reportedly prompted HUD to expand the definitions of foreclosed properties in an effort to also expand the coverage of the NSP program.
The move by the government agency, according to real estate market observers, will make more residential properties, including HUD foreclosures for sale, eligible for an NSP financial assistance and will help remove barriers brought about by housing market conditions.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.
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