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Health & Fitness

HUD Deceptive Property Values? Values Not Firmly Disclosed Upfront To Consumers?

UPDATE: After first posting this blog HUD mysteriously remove "AS-IS-Value" from their HUDhomestore.com listings front pages.  So I thought there should be an encore and post again.
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What I'm about to share with my readers is very starling and presents concerns in terms of whether or not HUD listed as-is values of their listed homes for sale are firm or not. When prospective home-buyers see this information pertaining to value little do they know that this value amount could be lower. Take a look at the below information below taken from one of HUD's homes for sale sites as-is value listed at $56,000. Now, with that said let us look at a perspective home-buying scenario just to clue consumers in on a few points.

HUDhomestore.com Appraisal Date: 11/26/2013 Bed/Bath: 3/2.00 List Price: $56,000.00 As-Is Value: $56,000.00

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Let's say for instance that a first-time home buyer is interested in buying this particular property above. Moreover, let's say that the prospective home-buyer has already been pre-approved not pre-qualified for an FHA 203(b) home loan of s...$100,000 with a lender, and have been made aware that one expense that must pocketed out apply for the loan is for an appraisal costing say...$400.

At some point the prospective buyer locate a HUD approved real estate broker certified to sell him the property. He tells the broker that he would like to place an offer on the above property for say $57,000. This being $1,000 above the asking price, so the broker explains to the prospective buyer the HUD disclosure that clearly state that a buyer could be responsible for any over bid amounts over the asking price in addition to his other normal closing costs. Let me mention that in this scenario the home qualifies for the HUD $100 down program. Now keep in mind that mortgage loans are based upon property values, OK? So, here's the breakdown with a value issue below:

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1. Selling Broker receives notice that buyer's bid has been accepted 2. After acquiring prospective buyer's signatures Selling Broker submit contract & disclosures to Listing Broker who then submit package to HUD's asset manager who then reviews package, and if all is ok will then present package to HUD representative to sign off on purchase contract as seller. 3.Afterwards Selling Broker learn that as-is value is not the $56,000 that was listed on website, and first seen by prospective buyer, but $50,000 instead.

And here's where it get even more interesting. Now selling Broker has to now share this new value with prospective buyer who has already signed sales contract to purchase at $57,000. Stay with me know. Although prospective buyer has paid his lender $400 to have property appraised and value comes in at say...$58,000 but FHA's guidelines say regardless lender must use HUD's new $50,000 value that both Selling Broker and prospective home buyer just learned about which would break down like this.

Offer price: $57,000

Ask price: $56,000

Original As-Is-Value $56,000

Down Pymt: $100

New value $50,000 (learned after contract has been accepted) Wow Surprise!!! Selling Broker or Prospective Buyer had no original disclosure of!!!

So, here's the math with original value: $57,000 offer price - $100 down = $56,900 loan amount -$56,000 original value = $900 overage amount cash from borrower(buyer) + normal closing costs.

Now, here's the math.with value change: $57,000 offer price - $100 down = $56,900 loan amount -$50,000 new value = $6,900 overage amount cash from borrower(buyer) + normal closing costs.

Who's the watch dog here? Does HUD know that this is happening! Does deceptive trade act come into play here involving no-disclosure to the consumer?

Feel free to comment at our Website www.RESQ-Firm.com blog section.
Max Yates-Blogger Real Estate Watch-Dog




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