HUD-Owned Real Estate Closings
When it comes to purchasing a new home, you’ve got plenty of options when it comes to government programs for both buying and financing. For example, financing a home through the HUD’s FHA program is just one government solution.
You can also purchase a home directly from the Department of Housing and Urban Development (HUD). HUD-owned real estate is any property that has been acquired by the agency after a foreclosure on a Federal Housing Administration (FHA) loan and put up for sale to recover the loss. If you do decide to purchase a HUD-owned home, you’ll need a closing agent who will act in your best interest.
READ: BUYING A FORECLOSED PROPERTY
In 2013, HUD implemented the Buyer Select Closing Agent Program, which means homebuyers can now select their own closing agents instead of having HUD designate one to you. Under this new program, the responsibility of all home closing functions transfer from HUD to the closing agent. Due to these changes, it’s imperative to find a closing agent that is highly skilled at navigating HUD closings.
The good news is that a qualified real estate attorney can act as a closing agent for buyers purchasing properties from HUD and the cost of having an attorney close the transaction is the same as using a title company.
Here are the requirements an attorney must meet to be considered a HUD-approved closing agent:
- An attorney or law firm may act as the closing agent only if they are licensed to practice law in Florida (or the state where the property is located), and state law allows for an attorney to facilitate HUD closings (Florida law does).
- The closing agent must be covered by errors and omissions insurance of at least $1,000,000.
- The closing agent may not, and cannot, participate in any part of the closing or title clearance process if they are currently debarred, suspended, or otherwise excluded from participating in HUD’s programs.
- The closing agent must comply with Title VIII of the Civil Rights Act of 1968.
- In addition, they must not discriminate based on race, color, creed, religion, national origin, sex, age, familial status, disability, marital status, or actual or perceived sexual orientation and gender identity.
- The closing agent may not participate in the closing if they have a direct financial interest in the property.
- Once the buyer and selling broker have identified the closing agent, the closing agent must sign and certify in the Closing Instructions and Certification that they meet HUD’s requirements and will adhere to HUD’s Closing Instructions.
- The closing agent will create the pre-closing package documentation, which includes the settlements, deeds, and all supporting documents. This package is submitted before the closing for review.
- The closing agent must notify HUD on the same day of the closing of the transaction.
- No later than one business day after the closing, the closing agent must deposit the sales proceeds and initiate the wire transfer for the full amount due to HUD. This must include the FHA case number.
- The closing agent must also deliver the deed for recording and notify the taxing authority and homeowners association (if applicable) of the title change no later than one business day after the closing.
- Within two days of the closing date, the closing agent must upload the final closing package, and within five days after closing, they must submit the original note, a copy of the mortgage with evidence it was delivered for recording, and a copy of the recorded mortgage once it is available.
Bruce Jacobs is an experienced real estate lawyer who can get your HUD transaction closed quickly and efficiently.
INTERESTED IN BUYING A HUD-OWNED PROPERTY? START HERE
Some of the tasks that Bruce can and will perform to close your HUD real estate transaction include:
- Review the real estate agreement to make sure the parties have performed their contractual obligations to one another
- Review the inspection report
- Review the good faith estimate, closing disclosure and other loan documents, including the note and mortgage
- Prepare and review any pre-occupancy or post-occupancy agreements
- Prepare escrow agreements related to items like post-closing repairs or utility issues
- Order and review a boundary Survey to check for any encroachments or easements
- Order a Title Search
- Order and review a municipal lien search
- Order and review a building code search to determine if there are any open permits or if the property has an illegal additions or modifications to the home
- Issue an Owner’s Title Insurance Policy
- Pay-off existing mortgages and obtain a Satisfaction of Mortgage
Contact Bruce R. Jacobs for a free consultation to find out how he can help you with your HUD home purchase. You can contact him today to schedule an appointment and learn more about your rights.
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Call (954) 961-1993