HUD will pay the following closing costs for a HUD Real Estate Owned (REO) Property purchase transaction:

• proration of property taxes and any special assessments such as Homeowners’ Association (HOA) fees and utility bills;
• condominium or HOA transfer fee, if applicable;
• the cost to provide condominium documents to the buyer;
• the repair escrow inspection fee of $200, if applicable;
• recording fees and charges for the deed;
• the overnight mailing fee for the final Closing Disclosure or similar legal document, signed by the buyers and the Closing Agent, and sent to the Asset Manager (AM) contractor; and
• state and local transfer taxes that are reasonable and customary in the jurisdiction where the Property is located.  

For closing costs claimed on discount sales to Governmental Entities and HUD-approved Nonprofits, HUD will deduct any closing costs paid from the total discount amount.
 
For Properties sold in competitive sales and not in Good Neighbor Next Door (GNND) transactions, HUD will pay the buyer’s actual financing and closing costs as requested on Line 5 of form HUD-9548, Sales Contract Property Disposition Program, in an amount up to 3 percent of the Property’s gross purchase price, provided that the costs are reasonable and customary in the jurisdiction where the Property is located. The gross purchase price is the bid price before any subtractions requested by the buyer for financing and closing costs and the broker’s sales commission.

No assistance for financing and loan closing costs or for broker's sales commission will be provided to Investor Buyers.
 
The buyer must identify on Line 5 of form HUD-9548, Sales Contract Property Disposition Program, their requested financing and closing costs.  HUD will retain any Line 5 funds not used at closing.
 
For additional information, please contact the Asset Manager with jurisdiction over the property.  To locate contact information for the Asset Manager, please visit the HUD HomeStore website at https://www.hudhomestore.gov and click “Help” in the gray tool bar.
 
For policy information, see Handbook 4000.1 IV.B.2.k.iv. available at: https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh
 

All policy information contained in this knowledge base article is based upon the referenced HUD policy document. Any lending or insuring decisions should adhere to the specific information contained in that underlying policy document.