As



with all loans, there are consequences to defaulting on payments of



HUD-insured mortgage or other loans.  The home is foreclosed, but



not by the standard process.  Instead, HUD takes possession of



any property paid for by a loan from a government agency, and then holds



a separate HUD auction for those properties.  These tend to be



less frequent than bank foreclosure auctions, but they offer investors



incredible opportunities to buy at a discount.  The government



tends to be more willing to sell at a discounted rate than the banks



are.

      The



beauty of HUD auctions is that anyone can find and attend them, for



free.  By policy, all of the foreclosed HUD homes are listed by



the lending agency on a HUD-approved listing service that requires no



purchase or sign-up or any other strings attached.  They are relatively



easy to find by searching online; the only real drawback is that each



state has its own listing agency, and therefore you cannot search for



HUD homes in a national network, for example, only a statewide one.

      Make



no mistake, HUD is struggling as much as (or more than) anyone else



during this difficult period in the economy and more specifically in



the real estate market. They hold too much inventory in a declining



market, and they appear to be desperate to unload some of it. 



This means a couple of things: huge discounts for buyers, but also negligent



care of the properties (they would rather just get rid of it than improve



it and increase its value).  The point is this: HUD auctions are



a great place to find deals, and there are plenty of them, but be careful



you are not buying some dilapidated building which the government considers



a burden they can unload on you.