Page 1665
i. Selection of Winning Bid (01/02/2020)
i. Notification by HUD of Winning Bid
HUD will alert the buyer or selling broker if they are the winning bidder.
ii. Submission of Sales Documents
Once HUD has notified the buyer or selling broker that they are the winning bidder, the buyer or selling broker must send the following to the AM within two business days:
• a fully completed form HUD-9548, signed by the buyer and selling broker;
• a pre-qualification letter, certification of cash funds, or other proof of funds; and
• all required addenda, if applicable, including:
o a Purchase Addendum for Individual Owner-Occupant Buyers or an Exclusive
Listing Period Purchase Addendum for Governmental Entities and HUD- Approved Nonprofits;
o a forfeiture of earnest money deposit addendum;
o a Buyer Select Closing Agent Addendum;
o closing instructions and certification;
o form HUD-9548-B, Discount Sales Addendum;
o all copies of form HUD-9545-Y and/or form HUD-9545-Z providing the
original Addendum and any Supplemental Addenda;
o form HUD-92564-CN, For Your Protection: Get a Home Inspection;
o Good Neighbor Next Door addenda;
o a flood zone property addendum; and
o any disclosures required by state or local law.
The selling broker must complete Line 3 of form HUD-9548 to identify the Closing Agent as the party who will be holding the earnest money deposit, unless otherwise instructed by the AM.
Page 1666
IV. CLAIMS AND DISPOSITION B. Title II Disposition
2. REO Property Disposition
iii. Earnest Money Deposit
(A) Definition
The Earnest Money Deposit is a buyer’s deposit toward the purchase of real estate to demonstrate that they are serious about wanting to complete the purchase.
(B) Standard
The buyer and selling broker must sign the earnest money forfeiture agreement. The selling broker must submit the earnest money deposit with the completed form HUD- 9548, for all sales other than ACA sales, to the AM within two business days of being notified that their buyer is the winning bidder, unless otherwise instructed by the AM, and the AM will forward the deposit to the Closing Agent.
(C) Form of Earnest Money Deposit
The earnest money deposit must be in the form of a cashier’s check, certified check, or money order with no termination date or cancellation provision, payable to the Closing Agent or to another entity as designated by HUD.
Earnest Money Deposit Amounts
The earnest money deposit amount is as follows:
• for Properties with a sales price of $50,000 or less, the earnest money deposit is $500;
• for Properties with a sales price greater than $50,000, the earnest money deposit is between $500 and $2,000, as determined by HUD;
• for vacant lots, the earnest money deposit is 50 percent of the list price; and
• for Properties to be purchased under the GNND Sales Program, the earnest money deposit is 1 percent of the list price, but no less than $500 and no more than $2,000.
The buyer or selling broker may contact the AM for the earnest money deposit amount for a specific Property.
(D) Disposition of Earnest Money Deposits When the Transaction Fails to Close
Should the sales transaction fail to close as scheduled, HUD may consider the earnest money deposit forfeited or may return all or a portion of the earnest money deposit.
Page 1667
IV. CLAIMS AND DISPOSITION B. Title II Disposition
2. REO Property Disposition
(1) Investor Buyer
Forfeiture of Entire Earnest Money Deposit
Subject to state law, the Investor Buyer forfeits 100 percent of the earnest money deposit, unless HUD cancels the sales contract due to HUD’s inability to close the transaction for any reason.
(2) Owner-Occupant Buyers
(a) Return of Entire Earnest Money Deposit
Subject to state law, HUD will return 100 percent of an Owner-Occupant Buyer’s earnest money deposit in the following circumstances:
• there has been a death in the immediate family (contract holder, spouse, or children living in the same household);
• there has been a recent serious illness in the immediate family that has resulted in significant medical expenses or substantial loss of income, thus adversely affecting the buyer’s financial ability to close the sale;
• there has been a loss of job by one of the primary wage earners, or substantial loss of income through no fault of the buyer;
• on an insured sale, HUD determines that the buyer is not an acceptable Borrower;
• on an uninsured sale, the buyer was pre-approved for FHA-insured mortgage financing in an appropriate amount by a recognized Mortgagee but, despite good faith efforts, was ultimately unable to secure mortgage financing;
• within 30 Days of the contract ratification date, the buyer has provided to the AM written documentation from a lender supporting the buyer’s inability to secure financing;
• HUD cancels the contract due to the documented presence and/or condition of lead-based paint and/or lead-based paint hazards;
• pursuant to the terms of the VA Amendatory Clause for purchasers using VA financing; or
• other circumstances evidencing equally good cause, as determined by HUD.
In order to receive any part of the earnest money deposit, the Owner-Occupant Buyer must submit documentation to the AM within allowed time limits evidencing the circumstances related to the transaction’s failure to close.
(b) Forfeiture of Entire Earnest Money Deposit
Subject to state law, the buyer forfeits 100 percent of the earnest money deposit in the following circumstances:
Page 1668
IV. CLAIMS AND DISPOSITION B. Title II Disposition
2. REO Property Disposition
• the buyer does not submit documentation supporting their reason for the return of any part of the earnest money deposit within 30 Days, or such other time allowed by the AM in writing, following contract cancellation; or
• the buyer’s submitted documentation fails to support an acceptable cause for the buyer’s failure to close.
(3) Vacant Lots
Subject to state law, buyers of vacant lots will be considered Investor Buyers for the purpose of earnest money deposit disposition.
(E) Failure to Abide by HUD’s Earnest Money Policy
Listing brokers who fail to comply with HUD’s instructions for the collection and forwarding of the earnest money deposit to the AM (or other party as instructed by the AM) may be subject to such action including:
• Limited Denial of Participation (LDP);
• notification of the state real estate commission or regulatory body;
• referral to the appropriate office(s) for enforcement review; and/or
• suspension or termination of the Broker’s NAID.
iv. Failure to Submit Sales Documents
Should the winning bidder fail to submit a ratified sales contract and accompanying documentation and deposits within allowed time limits, the AM may offer the Property to back-up bidders before relisting the Property.
v. Electronic Signatures
The use of electronic signatures is voluntary. HUD will permit the use of electronic signatures conducted in accordance with the Policy on Use of Electronic Signatures on the HUD REO form HUD-9548 and related addenda requiring signatures, unless otherwise prohibited by law.