HUD Guidelines 24 CFR 206.125

You are interested in a home and in the listing agents remarks you read: Property is being sold subject to HUD Guidelines 24 CFR 206.125. You immediately say to yourself “What does that mean?.” You then pick up the phone and call your REALTOR (if you are working with one already) or the listing agent of the property. And if you call your REALTOR they may know what the guideline is or they may not. And if you call the listing agent they probably explained it to you and then told you to Google that HUD Guideline for more information and clarification. So, if this scenario sounds familiar to you we are glad you choose our link to come to when you Googled HUD Guidelines 24 CFR 206.125 because we are going to break it down.

HUD Guidelines 24 CFR 206.125 is the code that governs how the sale of a Reverse Mortgage Foreclosure will take place. This Guideline is very specific and is to be followed to the ‘T’ by all parties involved.

To be eligible for a Reverse Mortgage one must 62+ years old, own a home, and have enough equity in their home (click here for more information on Reverse Mortgages). There are three scenarios in which a Reverse Mortgage for be Foreclosed on. The first is the party that established the Reverse Mortgage has passed away. The second is the party that established the Reverse Mortgage fails to pay the property taxes, the insurance for the property, or both. The final one is if the owner moves out of the residence and it is no longer their primary residence. In either of the before mentioned scenarios, the property is Foreclosed upon to establish insurable title to the property. 

After the Foreclosure process is completed the property will be listed with a local REALTOR and sold. This is where we dive into the continuously mentioned HUD Guidelines 24 CFR 206.125.  The full details of the Guideline are listed below but we are going to tell you what it means to you when making an offer to purchase a Reverse Mortgage Foreclosure first. The property is listed with the utilities Off and will not be turned on for any reason by the Foreclosure company. Utilities can be turned on for inspection purposes by the Buyer or the Buyer’s Agent at the Buyer’s expense. The property is sold “As Is” and No Repairs will be made by the seller. The property cannot and will not be Sold below the List Price. An appraisal is ordered for the property by the Foreclosure company and the appraisal establishes the List Price. The seller will not pay any money towards the Buyer’s Closing Cost (even if the purchase price is greater than the list price).

So to sum up before listing the full details of HUD Guidelines 24 CFR 206.125, the seller is selling the property as you see it, for the Price it is Listed for and not a penny less, and they will not pay for anything. We hope this has helped you understand the purchase process for a Reverse Mortgage Foreclosure. If you are in need of further information give us a call  my mobile at 931-261-9752 or First Realty office at 931-528-1573. 

Property is Being Sold Subject to HUD Guidelines 24 CFR 206.125

This property is a Fannie Mae Reverse Mortgage REO.

The code above allows an heir to purchase the property at 95% of the listed price.

Other stipulations of this type of property include:

  • Property cannot be sold below appraised value (LIST PRICE)
  • No mediation
  • No electronic signatures
  • No repairs, “AS IS AT TIME OF CLOSING”
  • No buyer closing costs paid by seller are allowed on the HUD
  • Buyer pays HOA Doc & Transfer Fee
  • No utilities are on. Buyer can pay to have them on for inspection
  • No agent transaction fees allowed on the HUD, regardless if the Buyer is paying
  • Seller will pay Seller’s closing costs and provide buyer with $29.95 PDQ Hazard Report
  • Any realty transfer taxes due will be the sole responsibility of the purchaser
  • Seller will bring taxes and HOA current through closing
  • 10% deposit on cash offers (Cashier’s Check)
  • $1,000 minimum deposit on financed offers (Cashier’s Check)
  • 60 day MINIMUM escrow period. Could be longer if title is not clear. If we can close sooner, we will.
  • Offers that Do Not meet these Guidelines will be REJECTED
  • Homepath financing is not available on these properties
  • Properties sold in “AS IS” condition at time of closing
  • PLEASE US BUYER’S LEGAL NAMES, WHAT IT SHOWS ON DRIVERS LICENSE
  • If LLC, will need stamped articles of incorporation pages
  • Buyer will need to pay $100 in order for utilities to be activated for inspections, or Selling agent may turn on utilities at Buyer’s expense with permission

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