A Thanksgiving Story:Home Sweet HUD Home Memory

(Flips, HUD homes, and bank foreclosures are all keen topics of interest. Books and magazine articles point to abundant possibilities for investors to trade and prosper in these real estate markets. Some writers display downright giddiness and whimsy at the prospect of bagging a discounted REO. The fact is that there are treasures waiting to be claimed at the end of the REO rainbow. This article is about the storm that usually precedes the investor rainbow. It is about the first chapter of an REO story. This one has a happy ending. Most REO stories have happy endings only for the banks and investors.)

Winter didn’t show any sign of relenting, and March ushered in with bluster in 1996. Mid-90s real estate was still an unstaked outpost on the information superhighway, and eastern Pennsylvania REALTORS had to visit a local newsstand on Wednesday mornings for a copy of the Philadelphia Inquirer where the week’s bounty of HUD houses was listed. In those days HUD homes were not in the multiple listing service and there were very few real estate agents who worked that segment of the market. I’d spend the rest of the morning taking pictures, preview the properties, and prepare my weekly REALTYgram newsletter for bulk mail delivery. (HUD homes are properties that are lost in foreclosure; the government insures FHA loans for lenders and sells them through several special HUD Homes For Sale programs after foreclosure is complete.)
      That week in the Inquirer there was a footnote on the listing of an attractive Allentown suburban area HUD property, “Occupied, knock first.” Obviously, there was a scheduling snafu and HUD did not execute a writ of eviction in time for the Inquirer posting. In the past, at other occupied HUD homes, there was never anyone home, often just the sound of hostile sounding canines, more than enough incentive to send me on my way.There were lights on in the Allentown home. I knocked and rang the doorbell. This time there were no dogs. The door opened slightly and a frightened looking elderly gentleman greeted me, his eyes awash in hopelessness and worry.
      “Who is it this time? Who are all these people coming to the door today?” A woman’s voice behind him demanded to know more about the front door cavalcade. Without saying a word he opened the front door and beckoned me to enter. He waved me into the living room and then he sat down, put his face in his hands and he cried.
After a moment he looked up at his wife. “I’m so sorry,” he said to her. Then he turned to me and said simply, “Please tell her.”
      I looked around the room. There were family photographs on the walls and tables. There was a 40th wedding anniversary pewter bowl next to a small tray of amber pill jars on the living room end table. An aluminum walker rested against the wall. There was no sign of a household in transition. There were no packed boxes, and no empty boxes waiting to be packed. I knew that the sheriff’s eviction visit was imminent. And I knew that at this moment it fell upon me to share this awful news with this puzzled little lady.“Why is he crying,” she asked. “My husband is not well. He had a heart attack recently.”
      “I am a REALTOR,” I explained. “I came to your house this morning because it has been listed for sale this week by HUD. Apparently there was a foreclosure recently and HUD has taken back your house. That’s why there are people knocking at the door. They want to see the house. I came this morning because I visit the new HUD homes every week when they come on the market. Usually the homes are vacant.”
     The woman fired a round of interrogatories in staccato fashion: “How could this happen without anyone telling us?” “We had some problems years ago but all of that was worked out.” “There must be a mistake.”
      Slowly her husband found the words to share the details of his story. He went to the garage to retrieve a file that contained a paper trail chronicling their financial quagmire. There were notices of foreclosure, forebearance agreements, and the final notices of sale. There was also an eviction notice that was less than two weeks from final execution. The gentleman had notes about dozens of telephone calls made over many months. He wanted to protect his wife from the stress and the worry of the matter.
      In the next two hours we pored over the paperwork. The woman’s puzzlement turned to anger and despair. A grown son returned home for lunch during my visit. He lived with his parents and was shocked to learn the events of the day. He had two brothers who lived locally and we decided to convene a family meeting that evening. In the meantime, I would return to my office and make some calls and try to figure out a way to help the family cope with the situation in an efficient manner. I called HUD’s listing broker in Allentown first. He confirmed that the sheriff was scheduled to evict the former property owners in two weeks. There would be no way to delay this, he said.
      Then I called the HUD office in Philadelphia. In the mid-1990s HUD still handled all of the details of the HUD Homes for Sale program. The HUD Homes for Sale outsourcing program was still on the drawing board, and I had the opportunity to speak with a senior HUD official who viewed the matter as a compelling human circumstance. He brainstormed with me for the better part of an hour and when I met the family members later that evening we had the blueprint of a possibility.
     I arrived at 7 PM to meet with the family. The grown children were discussing options ranging from in-law quarters in their own homes, to finding an apartment and renting moving trucks. The mood was sober but constructive, helpful, and tender.
      I was able to offer one additional possibility. The son who lived in the house could place a bid on the house. If the bid was the highest bid received at HUD, he could proceed to settlement. It was an outside chance at best, but the family decided to pursue that avenue, and designed a Plan B for the likelihood of an eviction.
      In the coming days the family rallied with emotional support, submitted a bid, and worked on Plan B. The following week we learned that the son’s bid was the highest tendered, and HUD officials called the sheriff’s office to cancel the eviction. The family remained in the house and celebrated a cheerful outcome and the parents extolled the treasure of their progeny. The other bidders, the investors, and the flippers moved on.

Comments

[Jason B. Graves]

An inspiring story! Thanks for sharing it with us!

[reo bulk packages]

I'm glad to hear the the family got to stay in their house. You did them a great service and received an award better than any commission check you could have collected. Kudos to all!