Buyers who do not intend to pay cash for their government foreclosures can avail of government-secured home loans offered by banks and other lending institutions. Government agencies that operate in the secondary home mortgage market include the Department of Housing and Urban Development, the Internal Revenue Service, the Veterans Affairs Office and the Department of Agriculture, to name some.
The HUD provides capital for the lending industry to enable lenders to keep providing homes for a greater number of people. The government-backed Fannie Mae and Freddie Mac operates by purchasing defaulted home loans which they will in turn offer back to the market for new buyers in the form of government foreclosures. Home owners who fail to settle taxes on their homes may also face foreclosure by the Internal Revenue Service and these foreclosures are likewise offered back to the market.
Government Foreclosures Auctions
Government agencies holding a number of foreclosed properties also use auction sales to sell these homes. These silent auctions are first made available to first-time buyers and owner-occupiers only. The opening bid is pegged low to encourage buyers. Real estate agents should represent bidders in this auction as the government does not deal with individuals during auctions. The HUD has a roster of real estate agents to represent buyers in the bidding process. When a home does not get sold in this round of auction, a second round is organized and is now made available to real estate companies as well.
Indeed, buying government foreclosures can prove to be a sound investment activity. Buyers should not be wary of working with the government in obtaining their dream homes because there are unique perks that only the government can provide. You can even qualify for grants and loan assistance programs offered by the HUD and other agencies to reduce your financial exposure when buying these homes.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.