A new HUD program in effect till mid 2013 gives priority – and a discount – to public and non-profit groups for REO purchases. The move, perhaps, was inspired by the success of a similar Fannie Mae initiative. HUD will also continue to provide grants for rehab of abandoned property as part of its community stimulus efforts under the Neighborhood Stabilization Program. See the following article from HousingWire for more on this.
The Department of Housing and Urban and Development (HUD) will give state and local governments and nonprofits participating in the Neighborhood Stabilization Program (NSP) preference to buy its REO at 10% below the appraised value.
The new initiative will also give these buyers a 14-day first-look period to consider buying the property ahead of investors. HUD secretary Shaun Donovan announced the new initiative at the National Council of La Raza annual conference in San Antonio, Texas.
In May, HUD announced a third round of NSP grants in addition to the $6bn awarded since September 2008. Grantees, which include nonprofits, state and local governments, use the money to buy and rehabilitate vacant homes in an effort to grow local economies and create jobs. The money is also put toward down payment and closing-cost assistance to low- and middle-income homebuyers.
The funds also go toward the formation of state land banks that can acquire HUD foreclosed properties. One of those banks, the Cuyahoga County Land Reutilization Corp., which was created by the Ohio State Legislature in 2009, reached an agreement with HUD in July to buy the government’s foreclosed properties for as little as $100.
Fannie Mae established its first look program in November that considers offers only from owner-occupants and buyers using public funds for the first 15 days of listing. In Nevada, the state with the highest foreclosure rate, Fannie extended the program to 30 days. Because of the program, the amount of Fannie Mae REO sales to owner-occupants increased to 10,000 properties from January to April this year.
The new HUD first-look program for its NSP funding grantees will be effective Monday and continue through May 31, 2013. Any properties that are not sold in that initial 14-day window will be listed and sold according to the Federal Housing Administration (FHA) standards.
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