The U.S. Department of Housing and Urban Development (HUD) has changed how it defines foreclosed and abandoned properties. The changes in classification will now include properties in default and uninhabitable homes with code violations. This change increases the number of properties that qualify for the Neighborhood Stabilization Program. Through NSP, HUD awards grants to purchase and redevelop foreclosed and abandoned homes in the hopes of stabilizing local communities.
Flexibility in the rules allows local partners to put taxpayer dollars to work quickly to stabilize neighborhoods hard-hit by foreclosure. That is an important issue here in our community, as many homes in Bryan and College Station are being listed as foreclosed.
Before the changes, HUD defined a home as “foreclosed” only if the foreclosure process was completed. But many homes in the foreclosure process are held up either in the court system, or the government’s own incentive programs. The new rule accepts properties as foreclosed if they are 60+ days delinquent on the mortgage, 90+ days behind on tax payments, or if the foreclosure process has been completed under local or state law.
“Abandoned” properties were thus if they had been standing vacant for at least 90 days. However, the old definition excluded properties which were abandoned by the owner, but still held tenants. That has been a repeated issue with TAMU college students renting out homes from owners who were out of state and not keeping up with the bills. Now, an abandoned property includes a home where no mortgage or tax payments have been made for 90 days. This new rule gives HUD grantees the ability to protect a tenant’s occupancy.
HUD has made these changes in hopes of allowing local partners to respond to market conditions and reverse the effects of foreclosure in neighborhoods as quickly as possible. Hopefully we will see some of the effects of this in the Bryan/College Station region.
If you have any questions regarding the changes to this rule, or for expert real estate advice, feel free to contact me.
Clay Lee – Realtor
Century 21 Beal, Inc.
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