The information that follows is intended to provide brief answers to some of the most frequently asked questions NHMS receives as the M&M Contractor for HUD in Ohio. Much of this guidance applies to other states as well. We hope it will be helpful by giving general information to interested homebuyers, their real estate agents or brokers, and others who may participate in purchasing HUD homes.

This information is not designed to be complete in every detail . It is also not intended to replace the individualized guidance that prospective purchasers should obtain from HUD-registered real estate professionals who are licensed to advise the home buying public regarding their rights and responsibilities in a real estate purchase transaction.

NHMS offers comprehensive training to licensees and provides continual updates to our website. If you are a potential purchaser, please obtain more specific and detailed information from a qualified agent or broker who is registered to sell HUD homes and who has obtained training and experience. Links to “Find an Agent” are on this website. You are strongly advised to have professional home inspections and to consider seeking out other advisors to assist you through any real estate transaction.

You may also research the information on HUD’s website, www.HUD.gov, which has a frequently asked questions section at this link: http://www.hud.gov/offices/hsg/sfh/reo/reobuyfaq.cfm

If you would like to add a question to the list, please send an email to one of the addresses given on Contact Us.

Frequently Asked and Answered Questions:

• Will HUD pay closing costs?
• Yes, within certain guidelines. The agent or broker representing the purchaser may request that HUD pay the closing costs, which may not exceed 3% of the property’s gross purchase price. This amount may be inserted on the HUD-9548 Sales Contract on Line #5, and is deducted from the net to HUD on Line #7. If the total closing costs on the HUD-1 are less than the amount stated on the Sales Contract, HUD will only reimburse the actual costs. No credit will be given to the purchaser for the difference. To enhance their bid (remembering that highest net to HUD wins), the purchasers may pay all or some of their own closing costs, and an amount lower than 3% may be inserted on Line #5 of the Sales Contract. Within the closing cost allowance, HUD will reimburse loan origination fees up to 1% of the purchase price. On 203(k) loans, HUD will reimburse origination fees up to the following amount: one percent (1%) of the total 203(k) mortgage, plus the Supplemental Origination Fee calculated on line B11 of form HUD-92700. (Line B11 is the greater of $350 or 1.5% of the total of rehabilitation costs and allowable fees.)

• Who are the Local Listing Brokers (LLBs), and what services do they provide?
• NHMS works with Local Listing Brokers to get the properties into the MLS as a courtesy to Realtor® members. They also put their "for sale" sign out. These LLBs are not paid any fee unless they are the successful selling broker, and then they are paid exactly as other HUD-registered selling brokers.
• To see a maps of our LLBs and their areas, go to our website and on the left select BrokerInformation>ListingAgents and the state.

• How can I become an LLB for HUD/NHMS?
• When we need new LLBs in an area, we post a Request for Proposals (RFP) for interested brokers to read and respond. The LLB Scope of Services and Marketing Agreement are described in the RFP. Currently we are not seeking additional LLBs; however, please watch our website, and if we need additional coverage, you may respond as the RFP directs.
• In the meantime, please continue to assist us by selling HUD homes to your purchasers and earning commissions for your efforts at closing. We appreciate you for that valuable contribution to this program.

• What is the relationship between MLS and www.NHMSI.com regarding listing the HUD properties?
• HUD wants all real estate licensees to be aware of the opportunity to sell HUD homes. Therefore, the listings are posted into MLS by our LLBs. However, the listings in MLS are a courtesy only. None of the usual processes apply to selling HUD homes because everything is done through our website, not through the listing broker.
• You should never make the mistake of assuming that MLS information is the most current and correct. Always check for status updates on our website before sending information out or planning to show any HUD listing!

• What’s a NAID# and how do I get one?
• The Name Address Identifier (NAID) number you must have in order to sell HUD homes and receive a commission is issued to brokers who make application on the proper forms. Remember: NAID = PAID! No one can sell HUD homes without being registered in advance. Click HERE to download the forms and instructions.
• More details are included in the HUD Homesellers Handbook (HHH) posted on our website under Broker Information. (See HHH pages 2 and 3.)

• What kind of training do you offer, and when?
• NHMS has teamed with a national real estate education provider, DSUniversity, to provide the best possible training seminars to agents and brokers. The primary course is “HUD Homesellers Success” and it is offered several times a year in the states where NHMS is the HUD Management and Marketing Contractor. Please check our website under Training Seminars and Announcements for dates, locations, and registration instructions. Or you may email us at Training@NHMSI.com.

• Can I earn CE credit if I attend training from NHMS?
• In states where Continuing Education (CE) is required for real estate license renewal, we offer CE credit for the “HUD Homesellers Success” seminar. Please see our Policies Statement regarding CE and other details, provided with the information about each of the seminar sessions posted on our website under Training Seminars and Announcements. You may also inquire at Training@NHMSI.com.

• My bid has been accepted, but MLS does not show “In Contract.” Why not?
• Until NHMS (on behalf of HUD as the seller) has received, reviewed, and ratified the HUD-9548 Sales Contract package, which must be complete and correct for us to sign it, there is NO contract pending. It’s 1-2-3 to have an “In Contract” deal:
• Have the HUD-9548 Contract Package filled out and signed by all parties.
• Bid electronically according to what is authorized by the buyer on the signed documents prior to the bidding deadline for that property.
• Deliver the signed docs in a correct and complete Contract Package after seeing in Bid Results on our website that yours is the winning bid.
• Only when those documents have been signed by one of the persons at NHMS with delegated authority for HUD, is the transaction “In Contract” or “Sale Pending.”
• Our LLBs are asked to change the status in MLS to “In Contract” after we notify them of the completion of the preceding steps. They receive notice usually once a week. This is why selling agents must always check www.NHMSI.com, rather than relying solely upon the MLS listings.

• Why does a property “disappear” from the website?
• As the Seller, HUD may withdraw a property from the market at any time without notice. When this happens for whatever reason, it will not be shown on our website. When it is cleared to relist, it will come back on the market at that time.
• Note: It may still be listed in MLS because the LLB is unaware that it has been temporarily taken off the market by HUD. Remember, always check our website.

• How can I get permission to show a HUD home?
• If your broker has a NAID#, and the property is available on our website, you may use your HUD keys and show it at your convenience without an appointment, and without calling the LLB.
• Just be sure to sign in on the registry that is posted in the house.

• May I advertise HUD homes?
• Yes, please do! These are not “exclusive right to sell” listings, so any HUD-registered brokers and their agents may advertise. Just be certain to follow the simple guidelines and restrictions on pages 9 and 10 of the “HUD Homesellers Handbook.”

• Do you allow “Open House” activities on the HUD homes?

No. The liability for HUD, NHMS, and the broker is not acceptable, given the potential for numerous people to be in the house at one time with little or no supervision. Damage to the home from compromised winterization, theft, and vandalism is also a risk HUD is unwilling to take. Please schedule showings, keep records of who and when, and meet prospective purchasers at pre-set times. This is safer for you, too!

• What are the requirements for showing HUD homes?

Only that your broker has a NAID# and you have the HUD keys. You must also sign the registration sheet that is posted in the house.

• What is the minimum bid I should advise my buyers to offer?
• HUD, like all Sellers, has an acceptable minimum amount above which an offer will be considered. Also like other Sellers, HUD does not publish what is the least amount it will accept!
• The ethical and professional answer to this question is: Make your best offer, given all the facts regarding the listing price, available comparables, the market trends, and the FHA appraisal price. The FHA appraised value is published on the listing as the “As Is” value.

• My contract was cancelled! Why?
• If your “In Contract” transaction is cancelled, it is usually because of failure to close on the date set forth in the “time is of the essence” paragraph #9 on the HUD-9548 Sales Contract.
• If you are not able to close for any reason on or before the date that is 45 days for all financing types except 203k (which is 60 days) from the date NHMS ratifies the contract, you MUST obtain an extension in writing. Please see page 9 of the HHH.

• My buyers can’t close in time, what do I do to extend closing?
• Remember time is of the essence! If your transaction will not close for any reason on the date set by the HUD-9548 Sales Contract, you must request an extension, accompanied by a fee, in advance!
• Please read the HHH on page 9, and follow the directions carefully and in plenty of time. The request form is on our website under “FORMS.”
• Extension requests with the fee and documentation about the reason go to the HUD Closing Agent at least five (5) business days prior to closing. They will make the request for additional time, and NHMS must approve it in advance.

• Must I use the HUD Closing Agent as the only title company?
• You may choose a title company other than the HUD contractor. But there are good reasons to use HUD’s Closing Agent (CA) that you might want to consider. HUD has pre-arranged for its CA to research the title, draw the deed, the HUD-1 Settlement Statement, and other documents, and has already paid for these services. This will save the Buyers some costs.
• Scheduling third party closings also involves additional timing arrangements for the closing appointment that might prove challenging. Delays are especially difficult and frequent during the busy days at the end of the month when you are making certain to close before your contract expires to avoid the necessity of an extension request and fee.

• Where do I note the buyer’s incentive on the contract?
• Do not note incentives on the HUD-9548 Sales Contract itself or attempt to add it to the bidding screen. HUD is aware of its incentive programs and if your Buyer’s transaction qualifies, the credit will be given at closing.
• The HUD Closing Agent will reflect any incentives and/or bonuses on the HUD-1.
• You may find notices and flyers about the incentives on our website to print for your Buyer’s lender, if necessary.

• Where do I note the Buyer’s plan to use the $100 down FHA program?
• If the transaction and your Buyers qualify for $100 down payment for an FHA loan, you may note their intent on the paragraph #4 “down payment of $___” line on the HUD-9548 Sales Contract.
• You should fill it in to read “down payment of $100 or TBD” for “To Be Determined.” This avoids having to change the HUD-9548 if, when the lender processes the application for the FHA loan, it becomes apparent that your Buyers will NOT qualify for $100 down.

• How long does it take to get a ratified contract back from HUD/NHMS?
• Deliver your complete and correct Contract Package directly to our Bordentown, NJ offices to save time. Always keep a tracking receipt to verify that it was received properly and when!
• Allow ten (10) business days to receive your ratified contract back to the email address you provided on the Bid Screen (or by delivery service if no valid email address was given).

• My FHA lender needs a copy of the HUD appraisal. How do we get it?
• Your lender requests a copy by email to Appraisals@NHMSI.com from the lender’s corporate email account with complete contact information in the signature block. The lender also gives the Case #, the Buyer’s name(s) and attaches a scanned copy of the first page of the HUD-9548 Sales Contract for that transaction.
• The FHA appraisal from our files will be delivered as an electronic reply to the lender’s email request.

• What’s happening when I see HUD properties in my neighborhood, but they are not listed on your website or in our MLS?
• Not all foreclosed vacant properties belong to HUD! Even if the county records indicate “HUD” in ownership, it may be that the lender who foreclosed has not conveyed the property to HUD/NHMS yet.
• When we have a property entered into HUD’s inventory, a NOTICE sign will be posted at the time we begin to make the property ready for the market. It is still not “For Sale” until we have completed that work. The work includes inspections, health and safety issues addressed, clean-out, and an appraisal. We also have documentation to review and marketing decisions to make.
• ONLY when the property is listed as available for bidding on our website is it truly “For Sale” and ready for you to show.

• What effect does HUD’s Lead-Based Paint (LBP) guidelines have on my transaction?
• Each house built before 1959 gets a LBP inspection and the results are disclosed in a LBP Addendum posted with the listing on our website. This is one of the addenda that must be signed and included in your complete and correct Contract Package. Each house built between 1960 and 1978, will have a LBP inspection report ordered only if the buyer chooses FHA financing. Disclosure of LBP conditions will be forthcoming usually within 2 weeks.
• You must also check the box in paragraph #11 of the HUD-9548 Sales Contract to read, “Lead-based paint addendum X is attached.”
• HUD is required by law to mitigate or stabilize the lead-based paint prior to closing in certain cases. This will most likely delay the closing of the transaction. The Buyers will not have to pay any extension fees. HUD will obtain a LBP Clearance Certificate and provide it to the Buyers. This requirement applies when the following conditions occur:
• The house was built prior to 1960.
• Lead based paint is present in unstable condition.
• The house is sold to Owner-Occupant Buyers.
• The Buyers are using FHA 203b financing.
• If the Buyers are using FHA 203k financing, the renovations must include mitigation or stabilization of the LBP, and HUD will credit to the Buyers a certain amount toward the costs. See the listing for the specific amount. Maximum amount of the credit from HUD is 10% of sales price.

• This transaction is not going to close at all. Can I release the Buyer’s earnest money deposit?

Not without permission from HUD.

Download and complete the “Contract Release and Earnest Money Disposition Request” from our website under “Forms.” Add documentation why the Buyer is not closing. Send this to Contracts@NHMSI.com by email. You will receive a reply to the request instructing you about the earnest money.

• Do the HUD keys work on every HUD-owned property NHMS handles?

Yes. We do not use lockboxes. You only need HUD’s standard keys to the doorknob and/or padlock.

• How do I get a HUD key?
• Your broker who has a NAID# should be able to supply you with the correct keys.
• If keys are needed, send an email with “Request for HUD Key” in the subject line. Include in the email your company name and complete contact information, the broker’s tax ID # used for registration with HUD, and the NAID#.
• When it has been verified that your NAID# is currently active, you will receive a reply with the information a locksmith needs to make a set of keys for you.
• DO NOT allow anyone else to use your keys!

• Now the website won’t accept my bid, even though I successfully submitted bids before. What’s wrong?

It is most likely that your broker’s NAID# expired or was deactivated. Go to the website and proceed to the state listings page. On the right, click “Check Your NAID” and follow the prompts. Your broker must renew the HUD registration before you can submit bids again.

• What are “Bid Results”?
• This is where winning bids are posted each day before noon after the bid deadline of midnight the previous day.
• If there is no winner posted here for the case you are working on, then bid again. The property is still available.

• What are “Bid Statistics”?

This is where we provide information about past bids. You may research previous activity on a property by reviewing this data. It does not show current bidding activity.

• Is the “Equal Housing” logo always required on signs and ads for HUD homes?

Yes! This logo is required on ALL real estate ads that mention HUD, FHA, or Fair Housing. It is strongly advised for all advertising by licensees for any property because it reflects your commitment to equality of service regarding housing.

• Why can’t I say “HUD Foreclosure” or “HUD Repo” when I advertise these properties?
• It misleads the public. HUD did not and does not foreclose.
• “Repo” is a slang term that is used for personal property, with negative connotations. HUD finds these terms unnecessary and even offensive in real estate transactions.
• HUD does not foreclose. It is the lender or “mortgagee” that was forced to foreclose due to default by the owner/borrower (mortgagor) on the terms of repayment of the FHA loan.
• As the insurer for FHA loans, HUD accepts the property that was collateral for the mortgage and pays the mortgagee the insured unpaid loan amount, plus costs of foreclosure.
• HUD becomes a receiver for the property after the foreclosure action is completed and the property is conveyed to HUD in exchange for the payment of the claim.
• We want the public to regard these properties as potential homes, thinking positively toward the future, not looking backwards to the unfortunate past.
• Agents and brokers who will not represent HUD-owned homes in a favorable way should not advertise them at all.  

• Am I allowed to share my NAID # with another broker who doesn’t have one yet?
• Never. This is fraudulent misuse of the HUD registration.
• The commission money paid by HUD is reported to the IRS as income to the broker by the tax ID information associated with the NAID#.
• And, remember, the NAID# carries a pledge of compliance with HUD rules for its home sales, as stated on the SAMS 1111A form. You do not want any of the negative consequences that accompany having someone else use your NAID#.

• When does the 15-day inspection period begin?
• All dates begin with contract ratification, which is the date NHMS personnel sign on behalf of HUD as the Seller.
• There should not be more than a few days between the time the HUD-9548 Sales Contract is ratified and the time it is delivered back to the buyer’s agent electronically.
• If there is a lengthier delay in delivery due to high volume of transactions, holidays, etc., and you need more time to complete inspections, you can request an additional few days by email to Info.Ohio@NHSMI.com.

• How do I get the utilities turned on for the inspections?
• Complete the “Utilities Activation Request” form and follow the instructions on the form to send it to our property management contractor, AMS.
• A deposit is required to cover the cost of re-winterization.

• We did a walk-through the day before closing and the property had been vandalized. What do we do?
• Contact NHMS and the Closing Agent by email immediately with the Case # and “Vandalism” in the subject line.
• We will have our property management contractor investigate and determine the estimated costs to restore the property to the pre-contract condition. Realize that in older homes, the replacement value of lost or damaged original equipment may be very low.
• HUD will possibly agree to a credit to the Buyer at closing for all or part of the estimated damages. If this is not acceptable, the Buyer may cancel the contract and have the earnest money deposit refunded.

• What should I do when the locks appear damaged or the HUD key doesn’t work to open the locks?
• Please contact our property management company directly using the toll free number 1-800-781-1558 with the property Case # or address, your name, and the date.
• Also send an email to LPesce@AMSREO.com with the Case # in the subject line and “Access Problem.”

• My broker does not have a NAID # and I want to sell a HUD home. How do I proceed?

You must work with a broker who is registered with HUD.

• What are the commissions HUD pays to brokers?
• Selling brokers are paid the commission amount they ask for on Line 6a of the HUD-9548 Sales Contract, not to exceed the maximum amount stated on the listing.
• The usual fee is up to 5%. In certain areas for properties that have been on the market longer, the fee can be as high as up to 10%.
• HUD also pays bonuses according to incentive programs published on our website whenever they are in effect.

• I have a complaint about an LLB. Whom do I contact?
• Please send an email with the Case #, if applicable, and words like “LLB Complaint” in the subject line. Send it to the appropriate email account given in Contact Us on our website.
• If the complaint involves alleged violations of state license laws, you may also contact state authorities who investigate agents and brokers.

• When I see ads or signs for HUD properties that are wrong, how should I report it?

In the same way as with LLB complaints. See # 38 above.

• How long does a buyer have to live in the house after closing to be regarded as an Owner/Occupant?
• One (1) year from the date of closing.
• That buyer may not purchase another HUD-owned home as an Owner/Occupant for two (2) years.

• Are investors allowed to offer on more than one HUD home at a time?

Yes. Investors may buy as many homes as they can afford with no time restrictions.

• Can agents/brokers buy HUD homes?

Yes. They may be both the purchaser and receive a commission for a properly sold and closed transaction.

• Can LLBs buy HUD homes?

Yes. However, they may NOT purchase their own listings.

• I placed a bid, but my clients changed their minds and do not want me to submit the contract, what do I do?

Immediately cancel your bid. There is a form on our website to do this on the page where state properties are listed.

• My buyers want to add a purchaser to their contract. Is that allowed?
• In no event will HUD allow the contract to be assigned. At least one of the original bidders who signed the HUD-9548 Sales Contract must complete the purchase and take title.
• To add an additional purchaser to assist with qualifying for the mortgage loan, a letter pre-approving that purchaser is needed.
• If it is a matter of sharing ownership, the lender must be informed and provide a letter stating they are aware of the additional owner.
• Send an email to Contracts@NHMSI.com asking to modify the HUD-9548 with an additional buyer. Put the Case # and “Contract Modification to Add a Buyer” in the subject line. Attach the documentation.

• One of the buyers wants to back out of the contract. What can we do to allow the others to purchase the property?
• A letter from the lender stating that the remaining buyer is pre-approved without the one who wishes to be released is needed.
• Send an email to Contracts@NHMSI.com asking to modify the HUD-9548 to remove a buyer. Put the Case # and “Contract Modification to Remove a Buyer” in the subject line. Attach the documentation.

• We need to change the type of financing to complete our HUD home purchase. What is required?

Send an email to Contracts@NHMSI.com with Case # and “Contract Modification to Change Financing” in the subject line.

• Will HUD sign the VA, OHFA, and FHA addenda that are required for these types of financing sources?
• No. HUD does not authorize NHMS to sign any form, statement, disclosure, or document other than HUD forms that are found on our website.
• The lender or broker may simply write “HUD Owned Property” in the space for the seller’s signature and keep a copy in their files.

• What is the HUD policy regarding Point of Sale inspections required by some Ohio cities?

HUD addresses this issue on a case-by-case basis and attempts to disclose what is required by the municipality with the listing. For more information send an email with the Case # and “POS Info Needed” to POS@NHMSI.com.