The Department of Housing and Urban Development announced Monday that it will give Gulf Coast hurricane evacuees an opportunity to purchase HUD-owned properties at a discount.
HUD provided interim rental housing to many families in the form of HUD-owned properties in the states of South Carolina, Georgia, Florida, Kentucky, Tennessee, Arkansas, Oklahoma and Texas following the hurricane disasters. These families will be offered the opportunity to purchase the homes they are currently occupying at a discount of 10 percent off the property’s fair market value. Additionally, HUD will help current tenants pay for property repairs by funding a repair escrow equal to 15 percent of the contract price, according to the announcement.
Hurricane evacuees who are not leasing a HUD-owned property may purchase a HUD home anywhere in the country during a 10-day lottery period.
Effective the week of May 1, almost all new properties listed for sale by HUD will be offered exclusively to hurricane evacuees for a period of five days at a price that is 10 percent below fair market value, the agency announced. Federal Emergency Management Agency-qualified evacuees will be required to submit a purchase offer though a licensed real estate broker.
If, at the end of the five-day lottery period, only one offer has been received, HUD will enter into a purchase contract after verifying the buyer’s FEMA registration number. If multiple offers are received on the same property, HUD will select the successful buyer by random lottery drawing.
HUD announced the following sale terms:
- The purchase price will be 90 percent of the appraised value.
- Buyers will be required to finance the purchase using either an FHA insured mortgage or all cash. Several mortgage types are available including Section 203(h) financing for disaster victims that allows 100 percent of the price to be financed; or 203(k) financing, which combines both purchase and rehabilitation financing in a single loan.
- HUD will pay all reasonable and customary closing costs in connection with the sale not to exceed 5 percent of the contract price.
- HUD will pay the real estate broker’s fee.
- All prospective buyers will be encouraged to participate in a home buyer education program, especially if they are first-time buyers.
- To be eligible for the discount (and in the case of current occupants only, the 15 percent repair fund), the buyer must agree to occupy the property as a primary residence for at least 12 months.
HUD officials reported that up to 20,000 properties could be made available to hurricane evacuees through this initiative. Additional information is available at http://www.hud.gov/offices/hsg/sfh/faqs/katsales.cfm or by calling (800) CALL-FHA.
“Our goal through this housing assistance initiative is to give families who have been impacted by the disaster a chance to restore stability to their lives,” said Federal Housing Commissioner Brian D. Montgomery in a statement. “By becoming homeowners, these families can begin to establish a sense of permanence as they concentrate on putting their lives in order.”
Within the next few weeks, all occupants will be notified by mail of the appraised value, contract price and other terms of sale. Occupants must notify HUD of their intention to purchase the home no later than 60 days prior to the expiration of their lease term; however they may exercise the option right away.
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