HUD Revises Procedures for HUD REO Properties and Claims Without Conveyance of Title Post-Foreclosure Sales Process

HUD recently issued ML 2025-13, to revise procedures for HUD Real Estate Owned (REO) properties and the Claims Without Conveyance of Title (CWCOT) post-foreclosure sales process. The ML effectively replaces and reverses policies previously established in ML 2022-01 and ML 2022-08.

The principal changes announced in ML 2025-13 involve shortening or eliminating exclusive purchasing periods previously reserved for owner-occupant buyers, HUD-approved nonprofits, and government entities.  For HUD REO properties, the exclusive listing period for these parties is reduced from 30 days back to the original 15 days.  More significantly, the separate 30-day exclusive sales period for these same parties within the CWCOT post-foreclosure process has been eliminated.  HUD indicated these changes were based on data showing the longer exclusive periods did not substantially increase sales to these buyers and potentially led to property deterioration and increased holding costs.

The revised 15-day exclusive listing period for HUD REO properties applies to all properties listed for sale on or after May 30, 2025.  While the CWCOT exclusive sales period can be eliminated immediately, it must be eliminated for all post-foreclosure sales associated with defaulted FHA-insured Mortgages scheduled to occur on or after May 30, 2025.