The foreclosures sales programs of the Departments of Housing and Urban Development and Veterans Affairs have been tweaked and fine-tuned to entice more buyers and ultimately cut down the real estate holdings of the HUD and the VA.

The number of HUD foreclosures has been soaring because more and more Americans are using home loans guaranteed by the Federal Housing Administration to purchase homes, and out of these borrowers, many have been defaulting on their loans.

According to FHA reports, about 30 percent of newly originated home loans are guaranteed by FHA. A huge majority of mortgage loans taken out by first time buyers are also guaranteed by FHA.

In 2009, a report from the Mortgage Bankers Association showed that over 18 percent of homeowners who used FHA mortgage loans were in default by at least one month or already in foreclosure, much higher than the 14-percent mortgage default rate for all home loans in the U.S.

To hasten HUD foreclosures sales, the department recently announced its plan of launching a financing program to enable owner occupant buyers to acquire real estate owned properties. It also asked the national government for a funding of around $41.6 million to continue carrying out its operations in helping homeowners.

Previously, the FHA announced the suspension of its 90-day anti-flipping rule to enable investors to help reduce HUD holdings. The rule was designed to prevent flippers from colluding with lenders and appraisers to artificially inflate home prices.

Now, sellers and FHA-backed buyers can close transactions involving properties held by investors for less than three months. However, sellers must be able to justify price increases of 20 percent or higher through documentation of renovations. Also, the properties must have not been involved in flipping activities over the previous 12 months.

Similarly, to help reduce the number of VA homes on its books, the Veterans Affairs Department has re-opened its vendee financing program for buyers, who can be investors or owner occupant buyers and who can be veterans or non-veterans.

Under the program, an owner occupant buyer can purchase a HUD property with no down payment. The amounts of closing costs and other fees can also be cut down through contributions from the seller or through incorporation of part of the closing costs in the total home loan amount.

With these foreclosures sales programs from these two federal agencies, it is hoped that foreclosure mitigation and home ownership goals are both achieved.

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