What Is a HUD Home

HUD, an acronym for the United States Department of Housing and Urban Development, is the Federal agency that oversees the resale of “HUD homes”. HUD homes refer to foreclosed properties that were conveyed to HUD when a homeowner failed to make payments on their FHA (Federal Housing Administration, a sub-agency of HUD) insured mortgage. As a result, the government sells these homes at auction in order to regain the financial loss due to the foreclosure.

A HUD home will generally fall into several types of residential real estate—single family residence, townhome, condominium and mobile home. The age and condition of a typical HUD home will vary from property to property. Due to this diversity among the current inventory of HUD homes, the government sells these homes “As-Is”. In other words, HUD does not warrant the condition of the properties. Though the typical home buyer may shy away from this lack of warranty, he or she should realize that these properties open up the opportunity to buy the home at an affordable price while maximizing the purchase potential in the home.