I was browsing through the HUD and VA listings sites and noticed alot of them listed an “AS-IS” value and a “List Price”
Here is an example:
What is the difference? In this example they are the same but I see others where the list price may be 60k and the as-is value is 67k.
They have an appraisal that they are using as the “As-Is” price and are showing the price that they are asking as the “List Price” based on what the FHA/VA has in them and the profit they need/would like to get.
Even at the List Price", there’s still some room in there.
I do not believe HUd/VA are in business for a profit. Most loan balances are higher than the list or as is value and they are losing big bucks on almost every deal.
HUD has insured these properties and typically doesn’t hold the note. When HUD pays a claim the lender deeds the property to HUD. I’ll flat out guarantee you that HUD isn’t loosing money. Premiums are taken in and claims are paid on future expected losses. In fact, HUD builds in stop losses based on a specific timeline. Do you think in todays market Lenders can actually profit from loan defaults? As we speak, foreign investors are gobbling up chunks of real estate that securitized the defauted debt they purchased. I guess the point is that times… they are a changin.
I know it is insurance. I was active when RTC and the federal savings and loan bailout and the billions tax payers had to fork out (loses). Sure there are billions in insurance premiums and you may be correct there may be profits. I have not checked the balance sheet lately. I am saying above that HUD is not paying off claims and making a profit on the houses they are selling. LOL
Oh, I see what you mean. Since HUD only insures a percentage of the loan, their loss, if any, is minimal. I don’t think HUD wants to make a profit. It’s all about maintaining the reserve. If losses become excessive, exceeding a set percentage of reserves, HUD simple asks for more money. I would love to get some input from anyone who works for HUD in this area. Ted, I know for a fact that depending on how long a home stays on the market, HUD is prepared to take 50-60 cents on the dollar. You don’t see these numbers in some regions because the market drives the price more. I can look at the time line and tell my client the absolute minimum $ (the stop loss) HUD’s agent will take for a property. To a large degree, VA works the same way.