Recently, the U.S. Department of Housing and Urban Development (HUD) issued Mortgagee Letter 2025-13 to revise the exclusive listing period for certain parties in connection with HUD real estate owned (REO) properties, and eliminate the exclusive sales period for the same parties in connection with the FHA loan claims without conveyance of title (CWCOT) post foreclosure sales process. The REO provisions of the Mortgagee Letter must be implemented for all HUD REO properties listed for sale on or after May 30, 2025. The CWCOT provisions of the Mortgagee Letter may be implemented immediately but must be implemented for all post-foreclosure sales associated with defaulted FHA-insured mortgages scheduled to occur on or after May 30, 2025.
In Mortgagee Letter 2022-01, HUD expanded the exclusive listing period for HUD REO properties for owner-occupant buyers, HUD-approved nonprofits, and government entities from 15 to 30 days.
In Mortgagee Letter 2022-08, HUD established an exclusive 30-day sales period for owner-occupant buyers, HUD-approved nonprofits, and government entities as part of the CWCOT post-foreclosure sale process.
HUD explains in Mortgagee Letter 2025-13 that these changes were made to make more properties "available directly to future homeowners or to future homeowners via programs run by HUD-approved" nonprofits or government entities. HUD then states:
"HUD data over the past several years show, at best, mixed results from these efforts [citing to tables in the Mortgagee Letter]. During the new CWCOT exclusive listing period, very few Properties have sold to Owner-Occupant Buyers and even fewer were purchased by HUD-approved Nonprofits and Government Entities. For REO, it's unclear whether the longer exclusive listing period resulted in higher overall REO sales to owner-occupants or shifted sales from the original listing period (Days 1-15) and/or the regular listing period. Further, REO sales to HUD-approved Nonprofits and Government Entities remain at near-zero levels. Low sales during exclusive listing periods leads to continued deterioration of the Properties, as well as additional holding costs, which leads to lower sales prices, greater losses to HUD, and an increase in time before Properties are returned to the market."
HUD decided to return the exclusive listing period for HUD REO properties for owner-occupant buyers, HUD-approved nonprofits, and government entities back to the previous 15 days. HUD also decided eliminate the exclusive sales period for owner-occupant buyers, HUD-approved nonprofits, and government entities as part of the CWCOT post-foreclosure sale process, and to provide that mortgagees that utilize the post-foreclosure sales efforts must list the property for sale to all third parties for a 60-day period. Previously the 60-days sales period for all third parties ran after the expiration of the exclusive 30-day period for owner-occupant buyers, HUD-approved nonprofits, and government entities.
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