Now a HUD home.....

When HUD pays off an insurance claim, they assume interim ownership and responsibility for each property in their care.  They become responsible for the condition and maintenance of the property and thus set about "securing" it.

Selling HUD owned homes is an involved process.  It includes contracting with a real estate broker to handle overall transactions.  The broker assigns a qualified real estate entity to be the listing agent.  Sometimes that listing agent can be near or far from the actual property.  HUD also contracts with various property management companies to undertakes the actual cleanup and ongoing maintenance activities.

In an nutshell, they monitor the health and condition of the property while it is in HUD's possession pending it's eventual sale.

Foreclosure!

When a bank repossess a house during the foreclosure process, the only legal way they can reassume full ownership is to put the property for auction on the county courthouse steps and then be the winning bidder.  From there the ownership papers get scrubbed and reassigned to the bank usually via a law firm acting as trustee for the bank.

The trustee stands on the courthouse steps and auctions the property off to any interested parties.  While anyone can bid and potentially be the winner, given the bank, by law, can only bid the full amount of the previous mortgage, the starting bid is always that of the original mortgage note, whatever it was.  That insures almost every time that the bank will be the only bidder.  No one in their right mind would submit a bid exceeding the amount of the full original mortgage note so the bank wins nearly every time.....which is ultimately the intended goal.

The house went up for auction on the courthouse steps on October 5, 2011.  I was there for the auction just to see if anyone bid on it.  It went for the starting bid of $50,200.  Since I think I'm in my right mind, I didn't place any competing bids though I will admit to having $40,000 in cashiers checks in my pocket on the off chance the bid might start lower but no such luck

Banks are in the business of lending money, not owning real estate so their goal is to dump the property.

And so they did.  

Their next step....make an insurance claim with HUD to recoup their losses.