What is a HUD home is, anyway? Well it’s when a property owner cannot make the monthly mortgage payments over a period of three to six months on an FHA mortgage, the lender will generally seize the property to be sold to satisfy the mortgage. This process is “foreclosure”.   

The homeowner has several opportunities to bring the loan current and avoid foreclosure. In the meantime, however, the lender begins the foreclosure process. First, the Lender records a Notice of Default (NOD) at the county recorder’s office in the county where the home is located. The NOD is a notice to the homeowner of the lender’s intentions to begin the foreclosure process. The filing of an NOD begins a reinstatement period of about three months, during which time the homeowner can bring the loan current. Generally speaking, the homeowner can bring the loan current anytime during that time period up until five days before the home’s auction date.

Note: Foreclosure laws vary from state to state. Please check with your locale for additional or adjusted rules that may apply.

When the Lender places a mortgage on a home using an FHA (Federal Housing Authority) loan, and that loan goes into default, the lender eventually forecloses on the home.

Since FHA guarantees a loan, the Lender receives the money owed to them, which is the balance of the mortgage from the mortgage insurance policy. The United States Department of Housing and Urban Development (HUD) then assumes ownership of the home, and the home becomes part of HUD’s large database of government-foreclosed homes. So there’s no more mystery as to what is a HUD home.

Search here if you’re thinking of buying a HUD home or other great real estate deals in the Baltimore area.