REO Properties being sold subject to 24 CFR 206.125 - What This Means
There is a new type of REO (Lender Owned ) property disclosure that is occassionally seen on properties listed for sale on the Los Angeles Real Estate Market MLS system. You may have seen this statement in the remarks section when looking for homes on the Internet. "This property is being sold subject to 24 CFR 206.125". This identifies the property as an REO that is being marketed after it had a Reverse Mortgage on it. Reverse mortgages are sometimes know as Home Equity Conversion Mortgages (HECM) . In many cases these were probably reverse mortgages taken out during the boom by someone over 62 and in many cases, not all, they are in better condition than some other REOs because they were transferred back to the lender due the death of the owner rather than as a result of a financial or fraudulent situation. They are becoming available because of the drop in in the value of homes since the peak of the market when some lenders were aggressively marketing reverse mortgages. The expectation at that time was that values would continue to increase. These REOs typically don't have any owner occupant or NSP buyer restrictions when they come on the market. There are a couple of things to note with them. They generally will not sell the property for less than the asking price which is usually an as-is appraised value established by an FHA roster Appraiser. They are sold As-Is at the time of closing with no repair reimbursements or allowances. They won't pay for home warranties. Home inspections and the connections of utilities for inspections will be at the buyer's expense. Also the seller will not contribute to buyer's closing costs. They should be viewed as soon as they come on the market because some of them are very good values and end up having multiple offers on them. Posted by Ben Nicolas on
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