HUD Releases Final Rule on REOs and Repair Escrow

On August 11th the Department of Housing and Urban Development (HUD) released a final rule on its Single Family Property Disposition Program, which oversees the management and sale of Real Estate Owned (REO) properties, to become effective September 12th.

Under this final rule, the list price for HUD REO can now be determined under several different options, including:  Broker Price Option (BPO), traditional appraisal and Automated Market Values (AMV).  The rule also increases the maximum value allowed to be placed in escrow for repairs to properties that do not meet the FHA minimum property standards to $10,000.

The listing of properties will be done by those means deemed to be appropriate by the HUD Secretary and all winning bids in competitive sales will be made publicly available.

To summarize, the final rule modifies HUD’s property disposition regulations by consolidating and reorganizing the regulations in recognition of industry standards.  It allows HUD to run the program more effectively and garner the best value for its REO properties.

Click to read the full final rule.