Go to government foreclosures to buy properties cheaply

Government foreclosure properties are owned by the US government, by many of its administrative wings. For example, the Department of Housing and Urban Development (HUD) is a welfare department that helps people buy their own homes. It guarantees mortgage loans through insurance provided by the Federal Housing Administration (FHA), another branch of HUD, and the Government. There are also government-sponsored agencies, Fannie Mae and Freddie Mac, that provide home loans at comparatively lower interest rates to the public.

All of these government property agencies have thousands of properties for sale today, foreclosed on for mortgage loan defaults. While HUD has properties in default from landlords, for which it has guaranteed payment and paid off debt from defaulting mortgage lenders, Fannie Mae and Freddie Mac have a large number of properties in default on their loans. The prevailing foreclosure crisis in the country is the reason behind these huge amounts of delinquent properties, piling up in foreclosed properties every month.

Another type of government foreclosures are properties seized by federal and state government agencies for the collection of taxes owed, fines imposed, and confiscation by the Internal Revenue Service for a variety of reasons. All these properties get the highest priority in the foreclosure process, above other debts such as mortgage loans in the Courts of Justice.

The one thing common about all of these government foreclosure properties is that they are available at unbelievably low prices to buyers and investors. HUD is primarily interested in providing financial assistance guarantee for single-family homes and multi-residence condominiums, primarily for low- and middle-income groups of people. Therefore, the fair market values ​​of these properties are comparatively lower than properties on the open market.

The mortgage loans given to these homeowners are not that big, compared to other properties. The interest rates charged are also very reasonable. But the downturn in the US economy has wreaked havoc on financial markets, job losses for many people and rising costs of living. The result is that millions of homeowners, including HUD homes, were unable to meet their financial commitments, such as mortgage loan repayments, and lost their properties to foreclosure.

This is why HUD foreclosure properties are priced so low. First-time home buyers are given priority in purchasing these properties for a set period of time from notification of these properties. Anyone, including investors, can then bid on these properties through HUD’s regional offices with the help of HUD-certified realtors.

Similarly, government repossessed properties in court for non-payment of taxes are very cheap, as the price quoted for these tax repossessed properties is only the amount of taxes owed to the government. Logically, they do not come close to the fair value of the property in question.

It should be understood that the majority of Government foreclosed properties will be repair properties as they are sold on an “as is” basis. But the very low price of these properties is adequate compensation for a buyer or investor to spend some money to get them into top-notch condition. Once renewed, these Government foreclosures will be converted into assets with an entirely different and higher value for good margins on investments.