Real Estate

HUD program offers investors a discount on default properties

Investment strategy should include claims without conveyance of title program


As the number of REO properties continues to shrink, investors looking for distressed inventory are often left scrambling to find affordable options. Many of these investors are unaware of a program that was designed to decrease the number of FHA properties in default through quick sales — the Claims Without Conveyance of Title (CWCOT) program.

The program was developed to help servicers sell properties quickly at auction without having to convey them back to the U.S. Department of Housing and Urban Development. The program has been in effect since 1987, but received a crucial update in 2014 when HUD recognized that the properties needed to be discounted to be competitive.

“Before this update, banks and servicers had to get a bid that protected the interest, and no investor would pay that, so all these properties that were foreclosed went back to the bank as REO,” said Tony Isbell, president of, the auction platform of Chronos Solutions.

Now, to expedite the sale of default properties, HUD is allowing bids that are below the total debt owed on the asset, which opens up a huge opportunity for investors. The amount of these mandatory discounts varies by state, but can be anywhere from 10% to 20% off the value of the property, and servicers can choose to discount them even more.

“For the first time in history, banks don’t have to foreclose and take ownership of these properties,” Isbell said. “The servicer’s goal is to never convey a property back to HUD. If a bank has to pay $25,000 before they can convey a property back to HUD, they can now come out of pocket and discount it for investors instead.”

The CWCOT program differs from an REO sale in some significant ways. For instance, properties are sold as is and investors may not be able to see the property ahead of the sale. But the benefits far outweigh the costs, with buyers getting a compelling discount.

Because many servicers and investors are new to the CWCOT program, Chronos Solutions offers high-touch service that walks them through the whole auction process. Whether the property is being sold through a live auction at the courthouse or through an online auction process, Chronos maintains close contact with the bidders through RealtyBid.

“We are in contact daily, sometimes even multiple times a day, with all the lenders and bidders involved to make sure they understand what’s happening,” Isbell said. “Bidders can call and get a live person who is knowledgeable about the process to talk them through it.”

Founded in 2007 as Matt Martin Real Estate Management, Chronos Solutions acquired RealtyBid in early 2015 and re-developed the company to be investor-friendly. The company combined state-of–the-art bidding technology with responsive customer service to create a streamlined process that makes it easy for both servicers and investors.

“Our technology allows us to be very agile and that benefits the seller and the bidder,” said Kristina Krutchik, director of auction services at RealtyBid. “As auctions unfold, our technology allows us to stay up with what is happening and get sales results to bidders quickly.”

In addition, RealtyBid uses highly advanced and respected data security systems to ensure every real estate transaction is secure. The company has marketed and sold hundreds of thousands of real estate assets since 1999, and has been auctioning properties online since 2001. This expertise translates to a secure, hassle-free experience for investors.

To find out more about the CWCOT program and how you can participate, read the white paper, Success with the FHA’s CWCOT program here, or visit 

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