HUD homes, once the most numerous foreclosure homes on the market, were reduced in the past several years with the sky rocketing popularity of sub prime mortgages.
As sub prime mortgages provided even lower down payments or in many cases no down payments the homebuyer that would have utilized an FHA mortgage moved to a sub prime mortgage. This has greatly reduced the amount of HUD homes for sale. Then the bottom fell out of the sub prime market as Wall Street realized the perils of buying mortgages where the buyer had no investment of their own in the transaction. In today's market the concept of "No Money Down" is only a distant memory.
So now where are buyers going? The answer will once again be FHA mortgages with their reduced down payment takes its rightful place as the alternative to conventional mortgages. Conventional down payments have remained t 5% where FHA is once again the best deal in town with 3.5% down. This 3.5% is up by .5% from the original 3% but this is merely a reaction to the absolutely insane amount of people that received loans without any investment of their own. At the time of this writing FHA has jumped to the front of the pack for moderate sized home mortgages.
It's pretty simple. If you don't have any skin in the game what is your incentive to stick it out and pay your mortgage through the tough times.
Not too long ago their were a couple of loan programs that used the charity angle on getting the home buyer into a house without the need for the home buyer to save up for the down payment or show any financial history of responsibility. These programs were called Ameridream, Nehemiah and others.
If the mortgage industry had taken a look at these programs in isolation they would have seen that well before the subprime market had gained any momentum these charity programs were experiencing a foreclosure rate of 400% to 500% higher than the normal FHA loan with 3% down.
What does all of this mean to the real estate market and to HUD homes that are now for sale? The answer is that the HUD foreclosures in the federal inventory are only a small percentage of what will find its way to the foreclosure market in a matter of months and should continue growing for the foreseeable future.
HUD foreclosure normally ran at a steady 4.5% of all homes purchased with FHA insured mortgages. This will increase as part of the overall foreclosure market as the home buying public receives more and more FHA loans.
Get yourself educated on the single largest growing segment in the foreclosure industry. HUD homes for sale are going to increase and take over as the single largest number of foreclosures on the market. This is no small statistic as HUD homes have rules on to themselves and offer the best way to obtain a foreclosure with all the benefits.
For more information on the benefits of foreclosures please visit USHUD.com.
