HUD Second Chance Auctions explained:
On occasion, real estate that is foreclosed by a lender does not achieve the desired goal: A new Homeowner!
The factors surrounding this can be varied so HUD authorizes the lender to offer these properties AT A SUBSTANTIAL DISCOUNT of their as-is appraised value.
The Housing and Urban Development Agency (HUD) implemented the Claims Without Conveyance of Title (CWCOT) program under Mortgagee Letter 87-20, dated June 23, 1987.
The idea was to reduce the amount of properties going into the HUD inventory…unfortunately, the program was very ineffective as over 90% of single family homes ended up back in HUD Inventory.
After the 2008 housing crises, HUD reevaluated the program and it’s parameters for the lenders hoping to increase the number of third party purchasers at foreclosure and prior to the transfer to HUD.
The program was changed and allowed bids and contracts FAR BELOW the total debt on the assets PRIOR to being transferred to HUD inventory by the lender.