HUD Retains Earnest Money on Cancelled Investor Sales

[Greg B.]

OK guys, I just got a nice lesson in the school of hard knocks. Paid the tuition for it too. Passing my lessons on to you. Maybe you won't be as stupid as I am.

Made a bid on a MH and acre. HUD foreclosure. Contract had 15 days for inspection. HUD accepted contract.

Inspection turned up copper conduit from meter base to house gone and A/C system striped. Massive water leaks. By the looks of things I speculate a neighbor did the damage and would do it again if repaired.

I cancelled contract easily within 15 days. I have waited a little while for return of earnest money.

Found out today that there was a clause that allows HUD to retain 100% of earnest money from investors seeking uninsured sales and 50% of earnest money seeking insured sales.

So, I lost 100% of my earnest money. My seller agent had not heard of this. The HUD listing agent had not heard of this. I don't know if this is new but I will scan it and post a copy in the FilePlace under the name "HUD doc" so you can see it for yourself.

Some days it doesn't pay to get out of bed. :wink: