When homeowners use the Federal Housing Administration (FHA) to underwrite the mortgage on their home, they will get a mortgage similar to everyone else’s conventional mortgage with some limitations. So, even though they bought an FHA home, it doesn’t mean that they can’t end up in foreclosure.
When that happens, the FHA will pay off the lender, and then the home’s ownership is transferred to the Housing and Urban Development (HUD) program. These are called HUD foreclosure properties, real estate. To bid on HUD foreclosure properties, real estate, the process is much different than buying it at auction or in a preforclosure sale. There are some pros and cons when compared to other types of foreclosures.