This HUD home in Denver is listed at $73,800. Homes like this can now be purchased for only $100 down.
Take a poll at the bottom of this blog.
It only takes a $100 downpayment for an owner-occupant to buy a HUD foreclosure in the Denver area.
Previously, it required a 3.5 percent downpayment. The $100 downpayment policy kicked off last Friday.
The new rule should boost the sale of homes owned by the U.S. Department of Housing and Urban Development, local experts said.
“I think it is going to have a huge impact,” said Jason Peck, of Coldwell Banker. He said the $100 downpayment had been previously offered, but HUD took it away about a year ago in the Denver area. The new program is in effect for the next 12 months, according to Denver’s HUD Homeownership Center.
Peck said he suspects one reason the $100 down payment is back is because nationally, HUD is bracing for another 40,000 homes to come on the market. A portion of those homes are distressed properties that were taken over by Bank of America when it purchased Countrywide Mortgage, he said. While he didn’t know how many more HUD homes will be available in the Denver area, one rule of thumb is that the Denver area has about 2 percent of the overall housing market. In that case, it could mean another 800 HUD homes could hit the market locally.
Not only will the new program be good for buyers who are cash-strapped, or don’t want to spend the money, but it also will help HUD liquidate its portfolio quicker, he said.
The program is available to owner-occupants only, not investors. Buyers using this program must get FHA-insured loans and must pay the full asking price for the home.
Peck said he also suspects that HUD felt it was selling too many of its foreclosures to investors, and this will help it return to its core mission of selling to owner-occupants.
“I think this is going to be a win-win for HUD and for buyers,” said Steve Scheer of Denver Realty Partners. “It’s going to help people who are short on cash and it is going to be good for HUD.This is really going to help first-time home buyers. I’ve been in a lot of HUD homes, while they often need some work, a lot of them are pretty nice.”
Katherine Jolliffe, a broker with 8z Real Estate, said most of the HUD foreclosures she sell are priced from about $60,000 to about $240,000.
“I’ve been doing HUD homes forever,” Jolliffe said. “I love selling HUD homes. I do a lot of them. It’s funny, we’ve been hearing for the past couple of years that we are going to see this huge increase in inventory. But our biggest problem right now is the lack of inventory.”
Lender Jocelyn Predovich believes $100 downpayments for HUD homes will open the door for a lot of buyers.
Janet Frederick, of Aspen Real Estate, also sells a lot of HUD homes. She typically is working on 15 to 20 HUD deals each months. The $100 downpayment already is sparking more interest from buyers, she said.
“I’ve had about 10 phone calls today,” Frederick said. “I suspect this is going to help quite a bit.”
Jocelyn Predovich, president and CEO of Limetree Lending Group, also said that she is seeing interest in the program, and it will only grow as more people become aware of it.
“Already today, I’ve had a number of Realtors call me and send me emails about the program,” she said. “I’ve also had another five or six consumers contact me today. I think people are going to start to look at their data bases and contact people who might have had problems coming up with a 3.5 percent downpayment. I do think it is going to stimulate activity with buyers. Who can’t come up with $100, right?”
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I am excited to see the $100.00 down program return to the Denver area. Tools to help buyers are a must today. It is training people on the program so that everyone understands is the real trick. Great article John!
Excuse me, but if you only have $100 “skin in the game” what keeps you from walking away from the loan if you hit a rough spot? Then the lenders and the surrounding neighborhood suffer all over again.
Plus, the real problem is in a different segment of the real estate market. Real live Sellers need to sell their home in order to be able to move and keep the market “flowing”.
HUD’s inventory already has a good market. Now, this makes the government an even more unfair competitor to “regular sellers”.
What will happen to the values of surrounding properties when a HUD “sells” for $100? Property values have already been devasted by foreclosure valuations. How will this help anyone but that single buyer? Talk about another leg down! How low can you go???