Using a VA loan on a HUD property

[Charles Eskew]

I recently (Thursday) placed a bid on a HUD foreclosure and won! The property is in good condition, but I expect the VA to require a few small repairs. The problem is HUD doesn't allow or pay for any repairs before closing. I've asked my current lender about holding funds in escrow, but that isn't a possibility. I do plan to ask a few other lenders, but I don't expect that to work. Because of that, I was wondering if anyone has heard of HUD making an exception to the policy? If so, any suggestions for moving forward? I can use conventional financing; however, I'd like to take advantage of no PMI and the much lower interest rates of the VA loans.

[Greg H.]

Very very difficult to do a VA loan on a HUD property. The simple answer is there is no flexibility or exceptions to the HUD policy of no repairs prior to closing. It is actually a federal crime to do so

Additional issues are that HUD may or may not allow the utilities to be activated(at your expense) which is required for a VA appraisal. Address this with your lender now as to if they have any work around