What is HUD? The federal Department of Housing and Urban Development: the department behind FHA insurance, the voucher and public housing programs, fair housing enforcement, and the standard manufactured homes are built to.
HUD is the United States Department of Housing and Urban Development, a cabinet department created in 1965 to carry federal housing policy and community development. It does not lend money to home buyers and it does not sell insurance to homeowners. It writes rules, insures loans other people make, funds programs other people run, and enforces a civil rights statute. Most people meet it without knowing they have, because its work reaches them through a lender, through a local housing authority, or through a label riveted to the side of a house. Four of its jobs turn up in ordinary housing transactions, and they are worth separating, because they have very little to do with one another beyond sharing a department.
The first is mortgage insurance. The Federal Housing Administration is an agency inside HUD, and an FHA loan is an ordinary lender's loan with FHA insurance behind it, which is what supports the low down payment and the wider credit box; the mortgage insurance premium the borrower pays is what funds it. The second is rental assistance. HUD funds the Housing Choice Voucher program and public housing, and local housing authorities administer them, so waiting lists, eligibility and payment standards are local decisions inside federal rules. The third is fair housing: HUD enforces the federal Fair Housing Act and takes complaints under it, alongside state law, which in Nevada is NRS 118.100 and reaches more characteristics than the federal list. The fourth is construction, since manufactured homes are built to HUD's federal standard.
The phrase a searcher is most likely to have run into is HUD home, and it means something narrow. When an FHA-insured loan forecloses, the lender files an insurance claim, HUD pays it, HUD takes the property, and HUD resells it through its own process, which runs a bidding period that favors owner-occupants, nonprofits and government agencies before investors get a look. That is a federal agency selling a house it acquired through an insurance claim. A bank-owned or REO listing is a lender selling a house it took back at its own trustee's sale, on ordinary terms through ordinary channels. Both are commonly sold as is by a seller who has never lived in the property, and the real difference is who the seller is and which rulebook the sale runs on.
A worked example
A buyer uses an FHA loan to buy at $340,000 with 3.5 percent down, $11,900. The loan is made by a private lender and insured by FHA, an agency inside HUD, and the borrower pays an up-front premium financed into the loan plus an annual premium collected monthly. That same buyer could bid on a HUD home, a house HUD took back after paying a claim on somebody else's FHA loan, during the period reserved for people who will live in it. And if the home is manufactured, the red label on the outside is a HUD label certifying it was built to HUD's federal standard. Three different parts of one department in a single transaction.
How a voucher works in Clark County
Questions people ask
Is HUD the same as FHA?
No. The Federal Housing Administration is an agency inside HUD. FHA insures mortgages that private lenders make; HUD is the department it sits in, and it also runs rental assistance, enforces the federal Fair Housing Act and sets the manufactured housing construction standard.
What is a HUD home?
A property HUD owns because it paid an insurance claim on a foreclosed FHA loan. HUD resells them through its own bidding process, with an initial period reserved for buyers who will live in the home and for nonprofits and government agencies before investors can bid.