The Department of Housing and Urban Development is piloting a more transparent arrangement for foreclosed property auctions.
HUD announced in a press release Tuesday that the two-day online auction it will hold this month will use a format that differs from the current one in several important ways. Michael Fluharty, a HUD spokesman, says the listings will be posted online about two weeks before and high bids will be revealed four times during the auction.
Online auctions for houses whose defaulted mortgages were insured by the Federal Housing Administration normally use a "blind" format and can end the same day HUD acquires the property, as long as a minimum price is met, Mr. Fluharty said. The agency has not dropped that model but could "move to sell all of our properties" the new way, depending on how this month's event goes.
A HUD spokesman said the pilot is meant not to fetch bigger prices for the homes, but to help increase homeownership opportunities.
The extended disclosure would help level the playing field between investors and potential homeowners by giving bidders more time to examine and research homes, neighborhoods, schools, and comparable sales.
Mr. Fluharty confirmed, however, that bids from parties looking for investment properties will not be excluded. "The opportunities are there for both categories," but "we certainly hope a fair share go to" people who want to live in the houses.
Up to 4,000 properties will be posted online Sunday. The auction will open Feb. 27 at 10 a.m. The top bids will be revealed at midnight, then three times the next day. Bidding will close Feb. 28 at midnight.
HUD said it would publicize the auction in "major newspapers throughout the country."
The agency expects that a percentage of the winning bidders will be unable to close on the homes, and no special arrangement is in place to help winners secure FHA-insured loans or other financing, Mr. Fluharty said.
Opening the process to more vigorous bidding could increase the prices, but Mr. Fluharty said he has "never heard" HUD officials suggest that as a goal.
John C. Weicher, HUD's assistant secretary for housing, said in the release that the agency "hopes this special effort will make more people aware of the opportunities that are available through our programs."
The list of houses to be sold is in flux. HUD properties typically sell for $70,000 to $80,000, Mr. Fluharty said.
Foreclosed properties that were insured by HUD's Department of Veterans Affairs are being sold by Ocwen Financial Corp. The West Palm Beach, Fla., company announced in September that it had won the 11-month, renewable contract.
