It is not the desire of HUD to own homes. That is the last thing that HUD wishes to do. They inherit homes from lenders that provided their homebuyers with government insured mortgages and left the scene of the crime when the mortgage was not paid by the home buyer. In order for HUD to dispose of the negative asset they are forced to try and sell it on the open market.
HUD insures the financing of millions of homes every year and these homes range in price, design, and type of neighborhood all across the country. HUD finances multi-family homes in order to provide housing to the poorest among us, but HUD also provides loans beyond the $700K level which represents over three times the average house price ($195k) in the country as of this writing.
HUD is going to pick up the slack that is left from the greed and stupidity of Fannie Mae and Freddie Mac, the two largest holders of mortgages in the country while simultaneously being partially financed by the federal government.
It is believed that this private/public charter gave the Executives of these mortgage investors a false sense of being impervious to the down turn in the housing market. Because of this false sense of security, Fannie Mae and Freddie Mac now dominate the market in the “foreclosures for sale” category and they may continue to do so for some time.
In time they will eventually be returned to their roles as intelligent third party mortgage investors and HUD homes will take their place as the largest segment of the foreclosure inventory.
This may result in the value of these homes being more diverse and generally higher in price than they have been in the past.
