Buying a HUD home or a government foreclosure.

Understanding listing codes and other information that may be new to you the home buyer.

The listing codes that are used for a HUD home relate to the ability of the borrower to obtain an FHA mortgage on the property. While the condition report will provide a more extensive description of the property, the listing code will provide you with a good idea of what the condition of the HUD home might be. HUD utilizes three listing codes that will identify you financing options on a particular property. 

IN - Insured:

A properties listed under the IN code would be eligible for FHA financing under Section 203(b) of the National Housing Act Program. The buyer would be able to work with a n approved FHA lender to obtain a new loan, the terms and interest rate of which would be determined on the open market. Depending on the loan to value of the purchase, the mortgage may include mortgage insurance. The originating lender would take the responsibility for determining whether the property meets Minimum Property Standards and, consequently, is eligible for FHA insurance.

IE – Insurable with repair escrow

A property listed under this code needs certain repairs or improvements which are expected to be required in order for the house to meet Minimum Property Standards for an FHA mortgage. The repairs cannot exceed $5,000. A purchase can qualify for FHA Section 203(b) mortgage if a repair escrow is established at closing. Repair under this escrow agreement must be completed within 90 days of the closing. If the buyer chooses to seek alternative conventional financing , they have the option to purchase the property "as-is" with no warranties from HUD.

The repairs mentioned must be monitored by an FHA lender. The lender is charged with inspecting the repair work and distributes the repair monies within the ninety day timeframe established. The costs of repairs were included in the original loan amount. Any excess funds left in the escrow account not used for the repairs will be applied to the unpaid principal balance of the loan.

UI – Uninsured

Properties listed under the UI code need certain repairs or improvements which are required to be repaired to be eligible for a FHA 203K rehabilitation mortgage. These repairs exceed $5,000. An FHA Section 203K mortgage can be place on the property if the purchaser and lender establish a repair escrow at closing, repairs of which will be completed 90 days of the closing. As in the other codes the buyers always have the option to seek conventional financing or cash to purchase the home in an “as-is” condition.

Complete listing code information can be found at
 http://www.hud.gov/offices/hsg/sfh/reo/reocodes.cfm


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