Reading into $100 Down HUD homes

Per the Mortgagee Letter 2011-19, if Buyer are purchasing HUD properties (i.e., homes that were foreclosed under an FHA loan), and placing $100 down, then the Buyer can roll the UFMIP (Up Front Mortgage Insurance Premium) into the loan provided the total amount of the loan plus the UFMIP doesn’t exceed 100% of the “as-is” (i.e., FHA appraisal amount).

Reading between the lines tells me they are willing to settle for less than the asking price since they are allowing for the UFMIP charge of currently 1% of the loan ( and net of the $100 down payment, to be rolled into the loan up to a certain level.


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