What Is A Government Foreclosure And How Is It Sold?

A government foreclosure can take place when a homeowner defaults on one or more of the following obligations:

• Mortgage payments from a lending organization

• Taxes, whether local, state or federal, and assessments

• Homeownership fees

• Utility bills

• Mechanic's liens

Any amounts available after a foreclosure sale will be appropriated according to a legal priority status.

There are different agencies that manage government foreclosure properties. When homeowners stop making payments when due, the title of property or deed returns back to the government according to specific conditions.

Government foreclosure properties

When minorities or low-income homeowner families want to lower the mortgage repayments that the original lenders offered them, they ask Fanny Mae and Freddie Mac for assistance.

These two companies are insurances secured by the government that serve a public service. If homebuyers qualify for these government plans, they have then access to lower taxes and a reduced down payment

In spite of this, if homeowners do not fulfill their financial obligations, the lending organization that issued the government secured mortgages goes on to demand Freddie Mac or Fanny Mae to pay off the amount of money they are owed.

In this case, the home or real estate is foreclosed and becomes the property of the government. Government agencies will then handle the government foreclosure sale.

Government tax foreclosures and public auctions

There are government agencies like the US customs and the IRS that have the power to seize properties due to tax delinquency or law infringements. Such seized property becomes then a government tax foreclosure.

The two government housing administrations HUD and its subagency the FHA also manage government foreclosure sales in public auctions. The VA or Department of Veterans' Affairs provides easier access to home mortgages for military personal. However, if and when homeowners are in default, they will repossess the property that the VA guaranteed.

Since the year 2004 though, the VA auctions off the government foreclosure sales through a private contractor, Ocwen Federal Bank. However, it must be said that Ocwen Federal Bank is now facing many lawsuits.

HUD and VA guaranteed programs

The only way to participate in the HUD and VA guaranteed programs is through HUD-certified real estate brokers. Briefly, these government agencies have to approve all real estate brokers before they are allowed to sell HUD homes or VA government foreclosures.

A very important point to remember is that you are not allowed to transfer the government contracts supplied by the HUD or the VA.

Auctions of government foreclosures

These government foreclosure properties are sold in auctions only through qualified certified real estate agents. They get a commission of six percent for each sale.

Any investor that wants to bid at these auctions must do it through those certified real estate agents. The bidders have to hand a letter from their bank stating that they can cover their bids and the six percent commission that is added to the final auction sale price.

These letters from the bank are only valid for sixty days, which means that the selection of the property they want to purchase and the subsequent bidding on the same government foreclosure have to be completed rather fast.

Buying government foreclosure homes

If you would like to buy government foreclosure homes, you should try to educate yourself about all the details of the process, your rights and your obligations. The HUD and the VA can give you extensive information about how to purchase government foreclosure properties. The HUD qualified real estate brokers will also be able to help you to buy your desired government foreclosure home.

Related popular pages that may interest and help you

| HUD home foreclosure | HUD home foreclosure | How to buy foreclosures |
| Buying foreclosure homes | Foreclosure home |
| HUD properties | Public foreclosure auction |