After your HUD sales contract has been approved/ratified by HUD, it is a contract with terms to be honored! I am still surprised at the number of sales agents who think these contracts can easily just have an amendment attached and keep the deal alive. The reasons amendments and changes are needed are many. Lets just get out on the table immediately, what is a “deal killer”…ie NOT amendable on these contracts.
· Sales Price
· Primary purchaser
· The amount of earnest money
· Closing Cost concession
· Net to HUD
· Sales agent commission paid by HUD
· Purchaser’s Social Security Number
· NAID Number used by Broker
· Moving from Investor to Owner or Occupant or Owner or Occupant to Investor
Recognizing that there are some issues that come up that do not break the spirit of the agreement, HUD does allow some items to be amended. First, go to the site of the HUD Asset Manager assigned the property to find the appropriate Amendment form and instructions.
- Financing type can be amended from FHA to conventional or cash or can be amended from Cash or conventional to FHA if the property is eligible. A lender letter or proof of funds will be required to make the change.
- Additional purchasers can be added but at least one primary purchaser must remain on the contract.
- Amount of the repair escrow can be amended for a 203B loan with a repair escrow. Supporting documentation must be provided with the amendment. These repairs may not exceed $5500. (actual repair escrow maximum of $5000 with 10% cushion allowance for a total of $5500)
- Address corrections can be requested – with supporting documentation.
- Closing Dates can be extended through the extension request process.
- Broker and purchaser must sign extension request form (found at Asset Manager’s website).
- An Extension fee is required and must accompany the request.
- A lender letter or current proof of funds must accompany the request and fee.
- All three items are to be delivered to the closing agent. The closing agent will accept only if all three documents are received five business days prior to the expiration of the contract term.
A couple examples of real requests received for HUD contracts..and the result of the request.
If the bid states the purchaser is the Owner Occupant, this means this home will be their primary residence to be occupied by the purchaser for 12 months and the purchaser has not purchased another HUD home as an owner/occupant in the last 24 months. This status CAN NOT be changed and if needed, the contract will be cancelled. Even if the lender underwrites the loan for the owner-occupant as an investor loan, the contract will be cancelled.
Finally, HUD does not allow contingencies (ie inspections, home closings, cashing a big check etc.). A HUD contract is a contract with limited ways that it can be amended.
These are just the rules of the game. We do not write them. We do want you to understand them.
Tags: HUD, Wilmoth, Wilmoth Group
HUD does a a 15 day contingency for owner occupants
Are you referrng to the time allowed for an inspection? It is 15 days but it is NOT a contingency. HUD homes are sold as-is. On homes with Insured or Insured Escrow status, owner occupanmt buyers have a priority in first 30 days. Uninsured properties give owner occupant purchasers a 5 day priority.
Beware when bidding as an investor and acquiring a conventional loan. This is the situation I am currently in. I have an accepted offer with HUD for them to pay 3% of the closing costs. During the loan process with my bank I was told by Fannie Mae guidelines seller can only pay 2% of the closing costs. I have tried to have the contract amended with no success. My only option left is to cancel my contract and bid again once the home is back on the market. I don’t know if I will lose my earnest money or not but this is my only option at this point. HUD should know Fannie Mae rules and told me this up front. They knew I was an investor and getting a conventional loan to buy this home. I warn you because I don’t want anyone to make the same innocent mistake I did.