The Montrose Gold Team Blog: Colorado: Montrose

What's HUD and What's a HUD Home?

What is HUD?

It might be a short texting acronym for How yoU Doing.

It is actually The Department of Housing and Urban Development.

Check them out yourself here:  www.hud.gov
 
What exactly is a HUD Home?

HUD is a government agency.  The Department of Housing and Urban Development.  They back up FHA Loans and when these default, HUD can end up liquidating the assets on the open market or through other channels.  They also promote home ownership, so they can offer first time home buyers some good options through their various program.  In addition in these tough times they are heading up the government directives like "Making Home Affordable" program. 

Learn more about Making Home Affordable here:   http://www.makinghomeaffordable.gov/

According to their web site:

"HUD's mission is to increase homeownership, support community development and increase access to affordable housing free from discrimination. To fulfill this mission, HUD will embrace high standards of ethics, management and accountability and forge new partnerships--particularly with faith-based and community organizations--that leverage resources and improve HUD's ability to be effective on the community level. "

So what does this mean to you?  

Well HUD works with FHA, The Federal Housing Authority, which is actually a part of HUD itself.  When someone defaults on their FHA guaranteed Loan or Mortgage, then the house can end up going back to HUD to liquidate if it hasn't been successfully sold previously by the bank or the home owner in a short sale.

If a house is very upside down, it may be destined to go back to HUD's liquidation department, because FHA has minimums they are allowed to take in a Short Sale.  These minimums are based on the original purchase price, appraisal and loan amount.  So if a house was way over-priced a couple years ago or has really declined in value, no buyer will be willing to pay what FHA is required by law to take as a minimum amount.  Then the home goes back to HUD to liquidate, they have the leeway to go below these minimums and meet the markets price.

HUD uses MCB - Michaelson, Connor and Boul, for the State of Colorado and in Montrose  as a REO asset management and liquidation company.

MCB handles all liquidations for HUD in a region of the United States including Colorado.  http://www.mcbreo.com/st_comain.htm

According to their website, MCB covers the following states for HUD:

• Arizona
• Colorado
• Michigan
• Montana
• Nevada
• Utah
• Wyoming

HUD hires one Real Estate agent for a very large multi-county region, they get a small amount of money for listing each of the properties in the MLS.   

For the Montrose Colorado area this agent is Marilyn Hammar.  Please don't call her.  She just puts the listings into the MLS for the Government.  She doesn't do photos, she doesn't inspect the properties, she doesn't have knowledge of them beyond what she is provided...   

Here is a link to a list of all the local listing Brokers for MCB REO in Colorado.  Use these names for your local agent to easily search (by agent) all the HUD homes in an area...

http://www.mcbreo.com/colorado/collb.htm

In cold regions and seasons, HUD will typically have the homes winterized and secured with a standard key that is the same for all HUD homes in an area.   This allows any agent to show the home (as long as they have a HUD key in their office). 

A Real Estate office and its Broker Owner (here at Century 21 Action Realty in Montrose Colorado, that is Ninah Hunter - www.c21actionrealty.com ) must be registered with the company responsible for liquidating HUD assets in your region in order to make offers on properties. 

Registration is not hard but does require some paperwork.  Once a company is registered any of the employed agents or brokers can submit HUD offers on behalf of their buyers.

Sometimes HUD properties will be featured in auctions, online or offline.  Here in Colorado MCB allows electronic bidding online.

Just like with Bank Owned properties don't expect HUD to fix a lot of things for you.  You are better off documenting the need and reducing your offer price and then taking care of these things yourself.

HUD/FHA do offer a "K" Loan (a smaller streamlined version of their 203K Rehabilitation Loan).  The "K" Loan allows a buyer to finance in and escrow the repair costs for the home.  The repairs must be cosmetic and not structural in nature and are limited to $35,000.

The FHA 203K Loan will handle structural repairs but it is a lot more paperwork. 

The "K" Loan is perfect for repainting, replacing carpet, tile or linoleum, etc.  

The 203K Loan grown up version can be used on a complete gut and remodel, an addition, etc. 

Both the "K" Loan and the 203K Loan lend based on the "after repaired appraised value", then the draws for repairs or improvements are handled like a construction loan.  Here is a link to the governments page about these loan programs.  Check them out if you are a buyer, a Realtor, or even an owner stuck with a property in need of a lot of rehabilitation.

http://www.hud.gov/offices/hsg/sfh/203k/203kmenu.cfm

So what are you waiting for go out and buy a HUD home today... Just kidding, but it sounded good. 
If you are in the market already for a house and you are looking for something that might need a little work, a HUD home is a great place to look...

But a Realtor is really the best place to start, because they will have HUD homes, REOs, short sales, desperate sellers (divorce, illness, death), retail secondary market, new construction, etc.   They allow you the best shot at looking at the whole market.  But it never hurts to look around a bit on your own.

Check out my websites for properties, homes and information about the Montrose Colorado area.

www.SoldCORE.com

www.COrmsbee.c21actionrealty.com

www.MontroseGoldTeamBlog.com

Hope this helped you get a better understanding of what a HUD Home is and how you might go about looking at one.

If you want to buy or sell a home in Western Colorado, especially in Montrose and the surrounding areas, give me a call. 

My name is Chris Ormsbee and I can be reached on my Cell phone at (970) 209-0252.

HUD Waives 90 Day Hold Period required for FHA Loans.

HUD realizes that the 90 day hold period "Seasoning" requirement for an FHA Loan is hurting buyers, especially first time home buyers more than the investors and rehab flippers (that they thought were getting rich by preying on the helpless homeowner (BTW some were))...

David H Stevens the Assistant Secretary for Housing - Federal Housing Commissioner Signed a a 1 year waiver into effect on January 15, 2010

Check out the actual text here...

http://www.hud.gov/offices/hsg/sfh/waivpropflip2010.pdf

My Summary of the Waiver:

• For just about anyone with Arms Length Transaction and Fair Marketing Effort.

• If More Than 20% Increase from Acquisition to Flip Price - then need Justification and or documented rehab, Second Appraisal and Inspected to meet FHA and HUD Standards.

• Does not apply to the Home Equity Conversion Program.

The Brief 90 Day Hold Policy History:

• June 7, 2006 - Waiver that let Government Agencies, Revitalization Efforts, Non Profits, Relocation Companies and Disaster Areas have an exemption from the 90 day rule.

• Foreclosing have a waiver to dispose of assets.

• June 8 2008 - Waiver exempting 90 day Hold for sales of REO properties acquired by Mortgagees

• My two cents for what its worth.

• May 15, 2009 - Extension of REO Mortgagee Waiver to May 10, 2010 (sounds like an REO liquidation deadline or another extension will come and I believe this Waiver will cover them till at least Feb 1, 2011.

• Sep 14, 2009 - Waiver granted exempting sales of properties that had been previously foreclosed or abandoned by for-profit or non-profits in HUD's Neighborhood Stabilization Program (NSP).

• January 15, 2010 - This Waiver granted, effective February 1, 2010, exempting just about everyone.

   

Basically the Department of Housing and Urban Development has realized that with the flood of foreclosure properties on market, their 90 day seasoning or anti-flipping rule is hurting short sale efforts and first time home buyers and other buyers that could otherwise buy affordable housing that has been bought up and rehabbed or at least inspected and certified to be HUD approved and a few other things... that it is OK to flip that house out to a buyer with an FHA HUD Guaranteed Loan.

This should aid re-absorption of these homes to first time home buyers as opposed to landlord/investors or other investors who are planning to ride it back up and sell the homes for a profit after the market rebounds, after renting them for a few years, even if it is at a loss. There is no doubt in my mind that the houses caught in this mess are best made into homes for first time and other home buyers, the people of the United States of America that need the lower down payment required by FHA, than from a conventional mortgage.

If the average home costs $200,000 in an area FHA requires 3.5 percent down which would be $7,000. The 10 or 20% required for some conventional loans would be $20,000 to $40,000. Everyone can see how this prevents or at least dissuades home ownership. Even if someone has the $20,000-$40,000, I contend they are better off going with a smaller down payment and keeping a reserve emergency fund, rather than completely depleting their savings and moving into a new home. 

Don't get me wrong, I am not anti-investor, but I think an investor play here is to be or finance/partner with the "rehab guy" swoop in, bail out the troubled home owner, clean the place up a bit, maybe carpet/paint/minor repair and flip it to a new home owner... now they can qualify with an FHA loan 3% down. If your a long or longer term investor, I think the play is to do the above but then to finance the houses for the buyer (that can't even qualify for an FHA loan - like me), with no shorter than a 5 year balloon - give em a chance to perform... and lending should return to more of a normal state by then to where they will hopefully have a little equity to refinance and pay you off.

I know there are pundits out there that think that "risky borrowing" has led us here... I disagree, that was a component of course, but it always exists and has existed. Without risk there is no reward!

I suppose you could even use the Alan Greenspan term of "irrational exuberance". But from where I was sitting in Montrose Colorado, it was the drying up of the money supply that killed the construction and job base of our town. From what I understand this mess was caused "more by" the Banks "irrationally exuberant" bets on derivatives (a highly leveraged and speculative investment - essentially a hedged  bet on interest rates and currencies from what I understand (an option on a futures contract)).  This coupled with some investment bank's unscrupulous "packaging" of loans to make them look less risky then they were so they could be sold off as A or B paper when they were really C.   The market was essentially "manipulated" by banks so they would have bigger profits.  Were they risk takers?  Yes.  Was it "irrationally exuberant"?  In my opinion Yes at best irresponsible and criminal.

Were the small contractors and builders of Montrose Colorado risk takers, yes, of course, but they were calculated seemingly smart risks they were taking... We didn't have whole subdivisions of 50 or more spec homes built to sell to no one. In Montrose, we had small family men and women that worked in the construction trades slowly cranking out one house at a time for the next family that wanted to move to a beautiful place in Western Colorado with Great Upstream Water as I like to call it. To some extent they, these people moving to Montrose slowed down, but often they just couldn't get a loan or couldn't sell their house, but they wanted to come. These small builders only need one house not to sell for a year or so and they can go under... They use the profit from one home to obtain the loan for the next home. Risk takers? Yes. Irrationally Exuberant? No.

Regardless of who's fault it is we need to figure out how to re-build America and the USA... Create jobs and put people back in homes, rather than on the street or in apartments. For us Realtors of the world we need to figure out how to increase the number of transactions (currently lacking the buyer component of the equation...)

I realize not everyone can own a home... If I didn't own a home already, I as a Realtor couldn't buy or own a home right now, because I don't have a W-2-ed steady paycheck and job... I live commission to commission and the banks and lenders consider that risky... Can't say I disagree, but I have never defaulted on a single loan in 46 years and don't plan to start... Due to complicated and lengthy tax returns, I have used the "evil liars loan" stated-loan programs of yesteryear for my last three real estate loans. So for those of you that are screaming here we go again, wave two... I think you are wrong.

The banks and AIG should have been left to fail and this mess would of cleared faster than it will with all the bank and insurance company bail outs... (Know why AIG was going down, an otherwise extremely profitable "Insurance Company"... because they were insuring the Bank's Derivative Bets that went bad... and then they couldn't pay up, if they didn't pay, the bank failed.) How they (AIG) were ever convinced to risk their butts for the Banks behalf without making them jump through the hoops and pay the "actuarialized safe house bet" premiums, that we would all have to for any kind of insurance is beyond me, but it happened.

So what do we do... blame and punish the average guy, who might have been framing houses, dry up the money supply and essentially freeze lending and tighten up credit so none of these people can get jobs or loans and then they will lose there houses and the press will blame their loss on their risky borrowing and over-zealous budgeting and income expectations.

I ask you this? Who's job is stable today? I dare you to name more than 10 that are essentially guaranteed (I can't even think of 10 at the moment...) I mean think of it, lawsuits, mergers, bankruptcies, bank failures, government cuts, city job cuts due to reduced tax base, etc. There is little that is safe other than being self employed in something with a relatively stable demand, but even then you are constantly battling off change, the big guy and the government itself...

There are no guarantees, there are just challenges and opportunities.

This "Hud Waiver" is a welcome change and I believe it will provide opportunity and greatly help many people from new families, to old ones starting over or upgrading homes, etc. It will even help investors, and contractors that go into rehabbing properties rather than building homes...

Chris Ormsbee

Century 21 Action Realty

The Montrose Gold Team 

www.C21ActionRealty.com

www.C21ActionRealty.com/COrmsbee

www.SoldCORE.com

www.MontroseGoldTeamBlog.com

www.MontroseGoldTeam.com

PS - Share this news with your fellow Realtors, so they can educate their buyers and investors about the change. Plus you might seem "smart" to them... Feel free to reblog as well. Thanks for reading my long worded rant - news blast.

How to find a Free list of Foreclosure Homes in and around Montrose Colorado

There are hundreds of web sites out there that try to "sell" you a list of foreclosure homes, bank owned properties, REOs and pre-foreclosure home leads. 

Some of these sites actually do a good job of condensing data and making the process simple, yet many if not most, regurgitate data recorded at the court house without cross referencing or checkin the status in other locations, like the local MLS.

This is where a Realtor can come in very handy, especially a Realtor that knows the Foreclosure process and how to find and negotiate the purchase of homes that are in the process of being Foreclosed and those that have been through the Foreclosure process and are now Bank Owned or REOs.

Most people looking for "foreclosure homes" are investors or people that want to be investors, but more and more there are people just looking for a "screaming deal" on a home for themselves.

The foreclosed homes range in value and our service area is very diverse.   The cheapest foreclosed home listing the Montrose Gold Team currently has listed is $155,000 and the highest is probably going to be priced about $1,000,000 to $1,250,000. 

The best generic advice for a Free Foreclosure List 

Access the county web site (where you are searching) by googling the "county name" and selecting the "real" government provided county website.  Then look for a page or tab for the trustee or possibly assessor or if they have a search function to search the site type in "Foreclosure List".  In general Government Websites are wonderful for providing tons of "FREE" information (we actually all paid for it, so use it)... You should always migrate to them in research.

In Montrose Colorado you can access the Free Foreclosure List at:

http://www.montrosecounty.net/treasurer/foreclosures/ 

Then if you have Microsoft Word you can click on the "Active" link and it will open on the same page in Word.  Otherwise you can right click and select Save Target As and save the ".doc" file and then you can open it with SWriter - OpenOffice.org's free word processing application.

Other sites you may need are the Assessor's site at:

http://eagleweb.montrosecounty.net/eagleassessor/web/splash.jsp

and the Online Recorded Records Searching Site at:

http://oncore.montrosecounty.net/Search.aspx

Unfortunately Montrose County Charges for access to the viewable "online records" but you can view the "header" information for free and search to see if documents exist in a party's name...

All of the Homes and Properties below have been through Foreclosure.  They are now considered bank owned or in one case FDIC owned because this property brought the small bank down!

This home below is in the Hastings Mesa Area off of Elam Ranch Rd is a bank owned property and went through a foreclosure.

Access is limited during the winter and requires snow mobile or snow shoe access.  However if plowed daily, it could probably be kept open year round.   This home was purchased for $1.8 Million and had $1.5 Million in Debt on it.  It had been on the market for 6 months at a price of $1.5 Million and didn't sell.  So it will probably be priced around $1.25 Million.

We have small neighborhood homes like this:

We have a local Golf Course Community where the whole community with the club house and undeveloped lots for sale was Foreclosed!  We have many homes in this community that have been foreclosed or are in the processes of being foreclosed. 

This home below is on Painted Wall in the Bridges Golf Course Community and is listed at $375,000.  It is under contract and set to close at the end of September.

Below is a picture of the club house at The Bridges Golf Course Community.

It  is owned by the FDIC.  They are accepting any bids over $7,000,000 starting tonight 9/18/09...  Original defaulted debt was approximately $24 Million.

There are all types of Foreclosed Properties and Homes...

The Foreclosure process is the same for commercial and residential property but slightly different (longer for farm ground). 

After the bank gets tired of not being paid, usually about 3 months of non-payment, then they will file a Notice of Election and Demand (NED) which starts the foreclosure process and requires the Public Trustee for the County to set the Sale Date 110-125 days after the filing of the NED.

The Owner must file a notice to Cure at least 10 days prior to the Sale Date if they intend to Cure, so if you have an owner whos home has started into the foreclosure process, it is a good idea to get this Notice from the County and file it immediately to leave their options open.

The Foreclosure List is just the beginning, then the research and the phone calls and visits begin.  A Realtor can be very helpful here unless you have done several of these and know all the ropes. 

If a home is "pre-foreclosure" you may be able to wrap the note, or save the home owner if they aren't too far underwater.  You basically have a "motivated seller".

If a home is "in foreclosure" then you will likely want to try to get the Bank to do a Short Sale.  If the homeowner has a lot of equity again you might be able to wrap their note, cure it and assume ownership of the home.

If a home is "going to foreclosure sale" - you can show up at the courthouse at 9:00 on Wednesday (in Montrose Colorado), bring your cash and make a bid and purchase the home there.

If a home has "gone through foreclosure"  - it is now considered "bank owned" and is often referred to as an REO which stands for Real Estate Owned (by the bank).

Hope this helps!

If you have any specific questions about how to find foreclosed homes that are bank owned, homes in the foreclosure process or homes that are about to go into foreclosure, please call or leave a comment and I will try to answer your questions.

So hopefully you know someone with about 8-10 Million and you will have them call me to buy this foreclosed Golf Course Community full of homes that have been foreclosed or are in the foreclosure process as we speak.   Realize there are many viable "real" families living here as well, paying dues and golfing.

Chris Ormsbee is a Realtor and is a licensed Real Estate Agent in the State of Colorado.  He is part of the Montrose Gold Team and works for Century 21 Action Realty in Montrose Colorado.  Century 21 Action Realty is located at 1245 E Main St. Montrose, CO 81401 and our phone number is (970) 209-0252.   Chris Ormsbee is NOT a Lawyer, Accountant, CPA, Surveyor, Structural Engineer, Financial Advisor, Judge, Jury or a Normal Guy, but he does occassionally sleep at a Holiday Inn Express.

Besides Commenting here, you can Contact Chris Ormsbee (especially if you want to buy or sell real estate):

Chris' Cell Phone is (970) 209-0252

Chris can be friend-ed on Facebook.  His user name is Chris Ormsbee

Chris also has other blogs pertaining to Real Estate:

http://www.YourCOREAdvisor.com/blog

http://www.MontroseGoldTeamBlog.com

Chris is also "diverse" and has

http://www.TheDivorceWorkshop.com - a divorce counseling and advice site.

http://IdeasThoughtsWhatevers.blogspot.com/  - a discussion about Internet Marketing Ideas and trial "sales pitches", wild wacky ideas and politics abound and some content may be oriented to adults - surfers beware!