Overhaul of U.S. Dept. of Housing and Urban Development (HUD) REO sales program features a superstore website, new management composition, increased bidding advantages for owner occupant purchasers, new real estate commission structure, and new policies and procedures that leave non-Realtor licensees scrambling for access to HUD properties.
HUDHomeStore.com is a one-stop shop for all information and resources pertaining to HUD Homes. The new website replaces a clunky, confusing myriad of government and regional contractor websites that made the search for HUD Homes a laborious, time consuming chore. Yardi, Santa Barbara based property and asset management software developer, built the supersite.
The new website gives real estate agents and consumers access to extensive information about properties, and all contracts, disclosures, and property condition reports can be downloaded at property detail pages. Agents and brokers register at HUDHomeStore.com prior to placing bids on HUD homes, and agents and consumers can sign up to receive automatic e-mail notices when new listings come on the market.
Daily property listings replace weekly announcements.
HUD’s new M&M III Contractor Program is the first overhaul of the agency’s REO sales system since 1999, when the agency outsourced management of its foreclosed FHA inventory as part of Al Gore’s “Reinvent Government” initiative. HUD is rolling out a new asset distribution method to streamline operations, capitalize on expertise of potential vendors, and provide flexibility in a changing environment.
“These new [M&M III] contracts epitomize FHA’s continuing effort to reduce risk, increase net returns, decrease holding times and improve efficiency in the resale of its inventory of foreclosed properties,” said HUD Secretary Shaun Donovan. “It is critically important that FHA successfully and efficiently sell its inventory of these properties and these contractors will help us do that.”
HUD’s current inventory of foreclosed FHA property is approximately 44,000 homes. That is up from the usual average level of 35,000 to 40,000.
The M&M III program replaces a single contractor design, separates marketing and maintenance responsibilities, and establishes a management trio in each market area — Asset Managers, Field Service Managers, and Mortgagee Compliance Managers.
Asset Managers assign HUD properties to Local Listing Brokers and award commissions up to three percent to those listing brokers. A commission based on percentage of sale price replaces a nominal flat fee listing brokers received prior to M&M III. The listing broker commission schedule is designed to incentivize listing brokerages to engage in agent and consumer outreach to spur more HUD Home sales. Selling broker commission caps are reduced from five percent to a maximum of three percent, in an amount corresponding to the Local Listing Broker commission in that market area.
Owner occupant buyers now enjoy a competitive edge over investors for 30 days versus the 10-day exclusive bidding period in the previous program.
Electronic lockboxes are installed on HUD Homes in many market areas for increased security and tracking. Although HUD M&M III directives assign responsibility for lockboxes to Field Service Managers, Asset Managers have instructed Local Listing Brokers to use MLS-issue lockboxes. Easy access to HUD properties in those market areas is restricted to MLS members, mostly Realtors.
Local Listing Brokers polled by Real Estate Economy Watch do not have a system in place to accommodate HUD certified, non-Realtor licensees who want to show HUD properties. Some Local Listing Brokers said non-Realtor licensees will have to make appointments to show HUD properties, and be met at those properties by a licensed agent with the listing brokerage.
Nonprofits and government agencies participating in Neighborhood Stabilization Projects (NSP) can register their organizations with HUD and become eligible for a “First Look” at FHA REO properties at HUDHomeStore.com. Approved agencies can tender their own bids. “First Look” bidding eliminates the need for nonprofits to hire real estate agents for HUD Homes property acquisition.