What can a private citizen do to combat HUD fraud when the federal agency charged with that responsibility seems to be sitting on its hands in the matter of HUD home sales swindles? Investors continue to purchase HUD homes with declarations of owner/occupant intentions. I published a report in February and subsequent posts with suggestions for stemming HUD fraud. Press reports at Inman News have prompted reporters from around the country to inquire about investigative direction.
If you believe that an investor purchased a HUD home during an owner/occupant priority bidding period, contact the M&M Contractor for your market area. This information is available at HUD's web site.
Local real estate agents have great tools that can nip the chicanery in the bud if enough of them step up to the plate. Here's a plan to find the Hudstlers.
- Use the multiple listing service to search for SOLD HUD homes. There is usually enough information to isolate HUD homes from the rest of the comps. For example, in the Rapattoni MLS system, Remarks and Agent Remarks fields are searchable, and the M&M web site is identified in the Agent Remarks sections. In our market area, I would include hooksvanholm.com as a searchable entry.
- Look for properties that are sold in 10 days or less.
- Check tax records for these properties and look for tell-tale signs of fraud. When the owner of the property receives tax bills at another address, follow-up is recommended. If the buyer of a $40,000 HUD home lives in a $200,000 home, there is reason to suspect trickery. If a search of the owner's name reveals that he/she owns half a dozen investment properties, proceed with your investigation.
- If there is a For Sale sign on a property that was a HUD property in the last 12 months, check with the M&M contractor to see if the property was sold during an owner/occupant period. If it was sold within the first 10 market days, chances are there are good grounds for suspicion. (Note: Many properties that are put under contract are sold during subsequent owner/occupant bidding periods. This type of investigation is a little more tricky and a little too involved for my little blog.)
- If there are tenants sought or living in a HUD property that was sold in an owner/occupant bidding period, report it to the M&M contractor and to HUD.
- When you make a report to the M&M contractor, include as much information as possible, including MLS data, tax record data, and any and all information at your disposal.
Please feel free to e-mail for help. I would also appreciate hearing about your efforts. Please keep us posted.
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