What is the relationship between HUD and the FHA?
HUD is responsible for overseeing the activities of the Federal Housing Administration (FHA). The main directive of the FHA is to provide mortgage insurance to approved lenders throughout the United States and its territories. The FHA insurance in effect guarantees the lender against any losses due to borrower default. Those approved lenders fund mortgages to qualifying borrowers under the FHA guidelines in the purchase of homes in certain areas around the country. Should the borrower default on their FHA insured loan, the property will go through the foreclosure process, HUD pays off the remaining balance of the loan to the lender and becomes the new owner of the foreclosed property. Since HUD is not in the business of owning real estate, it turns around and sells the property (referred to as HUD homes) through approved real estate agents and brokers.
