12 Top Problems That Lead to a HUD Contract Rejection


Your bid submitted at HUDHomestore.com has been accepted.  Congratulations!  You now have two business days to return a correct, fully executed contract package.  When you submitted your bid, there was an acknowledgement this contract already existed and had been executed.  So, dropping it off in the overnight mail should be easy!  Before sending it off, please review the issues that cause a HUD contract rejection by the Asset Manager.   Usually you are allowed one rejection.  If the contract is not correct on the second try, expect the bid to be cancelled and the property going back on the market at HUDHomestore.com.
The following is an important list for agents to review and make sure they understand in order to properly represent their buyers.
Top Issues that cause a HUD Contract Rejection:

  1. Line 12 of the HUD purchase contract –  buyer forgets to initial the Earnest Money policy acknowledgement (in blue ink also!)
  2. Name on contract does not match the name on the bid.
  3. Financing type on the contract should match how it was bid.
  4. Lead Based Paint Addendum – Broker must initial where required (not check marks!).  Buyers must initial every Lead Based Paint addendum.  There could be as many as three if buyer is using FHA and stabilization is performed.  Again, blue ink!
  5. Lender Letter does not indicate all the required items: loan type, loan amount, sales price, credit verified and name, title & contact information of loan officer.  Plus it can’t be more than 30 days old.  This Asset Manager states 99% of the time the lender letter is not in compliance.  Signature of the loan officer is no longer required AS LONG AS the letter contains the name, title, and contact info.
  6. Money orders or other certified funds for EM must be payable to HUD
  7. Dollar amounts on line 5, 6a, 6b, & 7 of the contract do not match the bid.
  8. Buyer/Broker signs in HUD’s space
  9. Authorization letter (POA) not included for agent to sign on behalf of broker.
  10. Not following all instructions on the correction email.  Second revisions are coming in with new errors because they did not compare to original contract.
  11. Contract Addendums missing Buyer initials where asked for.
  12. Radon Gas and Mold Notice – name of the  Marketing and Management Contractor is the name of the Asset Manager.

When in doubt, contact the Local Listing Broker.  This is an important part of our responsibilities..to ensure that your contract is prepared correctly and submitted on time!

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