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Agent TrainingHUD, VA & FHA training for real estate agents
HUD bids and closings, Good Neighbor Next Door, $100 down, FHA and VA loans, assumables and condo approval. 18 guides from Brian Lee Burke, team leader of The Kenna Group at Keller Williams DTC, licensed since 2003, each with the short answer, the steps and a script for your client.
Can buyers use a VA loan on a HUD home, and how do VA-owned homes sell?On HUD homes coded IN or IE, VA financing usually works, subject to VA's own appraisal. On UI homes it's harder, because VA has property standards much like FHA's, and the same problems block the loan. VA buyers order their own appraisal. They don't use HUD's FHA appraisal, and they don't use the $100 down incentive. That one is FHA only, and VA buyers may not need it anyway. VA-owned homes are a separate thing. They're sold by the VA through its property contractor, listed on the MLS, and open to anyone, veteran or not.Good Neighbor Next Door Program Explained: 50% Off, the 36-Month Rule and How to BidGood Neighbor Next Door program explained: HUD sells certain homes in revitalization areas at 50% off list price to full-time pre-K through 12 teachers, law enforcement officers, firefighters and EMTs. The buyer signs a no-interest, no-payment second mortgage for the discount and must live there 36 months as their only home.HUD $100 Down: How the FHA $100 Down Payment Incentive Works on HUD HomesHUD $100 down is an FHA incentive on certain HUD-owned homes. An owner-occupant buyer who uses an FHA loan can put $100 down instead of the usual FHA minimum. It only applies when the listing shows the incentive. The buyer still has to qualify for the loan and still pays closing costs.How do HUD home appraisals work, and what if one comes in low?FHA buyers usually use the appraisal HUD already has. The lender asks for the FHA case number to be transferred and receives HUD's report. If the buyer bids at or under list, value is rarely a problem, because the list price is the value. VA and conventional buyers order their own appraisal, which can come in higher or lower. If any buyer bids over the appraised value, the extra comes out of their pocket in cash. And HUD won't lower the price because of a low appraisal.How do I register as a HUD selling broker and get a NAID?HUD pays the buyer's broker out of every HUD sale. To get paid, HUD needs to know who you are, that you're licensed and where to send the money. The SAMS forms do that. The main ones are the SAMS-1111 (payee name and address) and the SAMS-1111-A (selling broker certification). HUD reviews them and issues the NAID. Your brokerage may already hold one, and your managing broker decides how bids get submitted under it.How do inspections work on an as-is HUD home?Get the utilities turned on through HUD's field service manager. Bring an inspector. Check the sewer, roof, electrical panel and furnace first, because that's where the five-figure surprises hide. Photograph everything. Get contractor numbers. Then build those numbers into the bid ceiling. If the math doesn't work, don't bid. The buyer is out a few hundred dollars instead of a house full of problems.How does FHA condo approval work, and what about HUD condos?FHA lends on condos in projects it has approved. You can look up any project on HUD's public condo list. If the project isn't approved, or its approval expired, a lender may be able to get a single-unit approval for just that unit, if the project passes a shorter test. On HUD condos, a code of IN or IE generally means HUD found the project approved. A UI condo often means it isn't, and the buyer will need single-unit approval, a different loan, or cash. HOA dues, liens, reserves and lawsuits can all change the answer.How does a VA assumable mortgage work?VA-backed loans can be assumed when the buyer qualifies with the servicer and VA's rules are met. The buyer does not have to be a veteran. The buyer takes over the balance, the rate and the remaining term. The difference between the price and that balance, the equity gap, is paid in cash or with other approved financing. There's a VA funding fee on assumptions, unless the buyer is exempt. The big seller question: unless an eligible veteran buyer substitutes their own entitlement, the seller's entitlement can stay tied to that loan until it's paid off.How does an FHA assumable mortgage work?The buyer applies with the seller's loan servicer and goes through a full credit and income review. If approved, they take over the balance, rate, remaining term and the FHA mortgage insurance that comes with the loan. Investors generally can't assume newer FHA loans. The buyer must cover the difference between the price and the loan balance. That gap is paid in cash or, where current FHA rules and a lender allow it, with a second loan. Assumptions run on the servicer's clock, which is often slower than a normal purchase loan.How does the VA appraisal process work, including Tidewater?VA assigns an appraiser to the loan. The appraiser checks value and whether the home meets VA's minimum property requirements (MPRs) for safety, soundness and sanitation. If the appraiser expects the value to come in below the price, VA's Tidewater process gives the agent a short window to send more sales data before the report is finished. If the value still comes in low, the buyer can request a reconsideration of value through the lender, renegotiate, pay the difference in cash, or use the VA escape clause, which lets the buyer cancel without losing earnest money if the price is above the VA value.How to Write an Offer on a HUD Home: Bid Steps, Net to HUD and the 48-Hour PackageHow to write an offer on a HUD home: you don't use your state contract. A HUD-registered broker submits a sealed bid on HUDHomeStore.gov under a NAID number. HUD picks the bid that nets it the most after commission and closing cost help. If HUD accepts, you have about two business days to deliver the signed package and earnest money.What are the HUD earnest money rules and closing timeline?When HUD accepts the bid, a clock starts. You have about 48 hours to get the signed HUD contract package and earnest money in. Then you have the contract's closing window. Need more time? Request an extension before the deadline and pay HUD's fee. Miss it with no extension, and the contract ends. Whether the buyer gets the earnest money back depends on why, and HUD decides.What are the HUD owner-occupant and investor bid periods?Every HUD listing moves through periods. The period decides who can bid and when HUD opens bids.What do HUD codes IN, IE and UI mean, and when do I need a 203(k)?| Code | Meaning | Loans that work | Owner-occupant window | |---|---|---|---| | IN | Insured. Meets FHA standards as is. | Standard FHA, VA, conventional, cash | 15 days | | IE | Insured with escrow. Needs a short list of repairs. | FHA with repair escrow, VA, conventional, cash | 15 days | | UI | Uninsured. Repairs too big for an escrow, or a system is missing. | FHA 203(k), conventional renovation, cash | 5 days | | UK | Unknown. Condition data incomplete. | Ask before bidding. Treat as UI. | Varies |What is the HUD owner-occupant certification and the 12-month rule?When your buyer bids as an owner-occupant, they sign a certification that goes to a federal agency. In plain words, they promise three things. They will move in soon after closing, and HUD's addendum sets the move-in window. They will live there as their primary home for at least 12 months. And they are buying for themselves, with no investor behind them. They also confirm they have not bought a HUD home as an owner-occupant in the last 24 months. Lying on it is a federal crime. A real change in life after closing is not.What's the difference between FHA and conventional loans?- FHA: easier to qualify, more mortgage insurance, stricter on the home's condition. - Conventional: harder to qualify, cheaper over time for strong credit, more flexible on the home.What's the difference between a bank-owned (REO) home, a HUD home and a short sale?A bank-owned (REO) home was foreclosed and is now owned by a lender or servicer. You negotiate with an asset manager on a normal contract plus bank addenda. A HUD home was foreclosed on an FHA loan and is now owned by the federal government. Offers are sealed bids on HUDHomeStore through a HUD-registered broker, with an owner-occupant priority period. A short sale is still owned by the homeowner, who owes more than it's worth. The owner accepts your offer, then the lender has to approve the price, which can take a long time.Why do HUD bids get rejected, and how do backup offers work?HUD scores bids on net, not price. Net is the price minus the closing costs you asked HUD to pay, minus the buyer-broker compensation. It compares that net to a threshold tied to the As-Is value, and it doesn't publish the threshold. Most rejections are a low net, the wrong loan for the code, weak paperwork, broker registration issues, owner-occupant problems, the wrong bid period, or a late contract package. Losing bids can stay alive as backups. HUD contracts fall apart often, and a backup can get the house without bidding again.
