Foreclosure Digest

Government Foreclosures on homes will occur when homeowners default on:

• Mortgage payments from lending institutions
• Failure to pay Taxes (local, state and federal) and assessments
• Homeownership fees
• Unpaid Utility bills
• Mechanics Liens (this is the right to payment for contractual services on the house and land, legally executable by law) Any monies available after the foreclosure sale will be appropriated according legal priority status.

Different agencies will handle government foreclosure properties.  When the homeowners default on payments, the title of property or deed reverts back to the government under certain conditions.

Fanny Mae and Freddie Mac are government secured insurances that homeowners apply for in order to reduce their original mortgage payments.  Homeowners can benefit from lower taxes and a lower down payment if they qualify for these government plans.  However should they default on these payment plans, the bank or other lending company that issued these government backed loans, will go to the Fanny Mae, and Freddie Mac foundations to retrieve their money. The property now becomes government property, and these divisions will proceed with the government foreclosure sale.

Government bodies such as the US customs, and the department of internal revenue may directly seize property for nonpayment of taxes and law violations.

HUD, which is the US Department of Housing and Urban Development and the FHA, or the Federal Housing Association, are also responsible for government foreclosure sales that are run by public auctions.

The Department of Veterans Affairs guarantees home ownership loans for military personal.  However, they will seize property that was guaranteed by the VA when homeowners default on payment.

The US government HUD and VA guaranteed programs are only offered through licensed real estate agents and brokers that have been approved by these government bodies.  Another important thing to note is that you cannot reassign the government contracts provided by the US Department of Housing and Urban Development (HUD) or the Department of Veterans Affairs (VA).

Similarly, these properties are sold at auction through the licensed authorized real estate agents.  These real estate agents receive a six percent commission for procuring a sale.  Unlike other public auctions an investor must go through these licensed agents in order to bid.  A bidder will need to provide a letter from their bank to insure they can cover their bid and, in turn, the six percent real estate agent commission is added to the bid. The letter from the bank is only valid for a period of 60 days, so selection and bidding on property must be done quickly.

Before purchasing government foreclosure property, learn about your rights and obligations concerning these sales. The US Department of Housing and Urban Development (HUD) can provide you with all available information on buying government foreclosures, and the licensed real estate agents can provide you with the information as well.