ShareOn May 5, 2022, the Department of Housing and Urban Development announced the establishment of an exclusive 30-day listing period for the sale of foreclosed formerly FHA-insured properties to Owner-Occupant Buyers, Governmental Entities, and HUD-approved nonprofits.
The Biden Administration’s goal for this policy change is to ensure more single-family properties go towards home-ownership rather than fall into the hands of large investors who turn those homes into rentals. This FHA Claims Without Conveyance of Title (CWCOT) Process allows for lenders to sell their formerly FHA-insured properties directly and HUD will pay insurance benefits for losses to the lender, reducing costs for both HUD and the lender. In order to participate in the program, owner-occupant buyers must provide a signed statement that they intend to use the property as their principal residence. Non-profit buyers must be pre-approved by HUD and government entity buyers must provide a signed statement on their letterhead stating they are a government entity. All buyers will be given a minimum of 15 days after the date of the sales contract ratification to cancel the purchase if there is an issue with the properties condition. Buyers also have up to 7 days before the closing date to cancel the purchase due to issues with title. If no sale is made in the first 30 days, there will be an additional period of 60 days where the lender can sell the property to a third-party, otherwise the property will convey to HUD.