Foreclosures, Foreclosures, Foreclosures! The dirty "F" word is popping up in real estate advertising everywhere -- on the web, in newspapers and magazines, in flyers at the local convenience mart. When the word is attached to information about HUD homes, and the ad is placed by a registered HUD broker, there's a serious problem. The word "foreclosure" is forbidden in HUD homes advertising.

The U.S. Dept. of Housing and Urban Development (HUD) does not affect the actual foreclosure; the lender who holds the mortgage note and takes it through the foreclosure process is responsible for executing the foreclosure. HUD insures the mortgage and settles a claim with the lender. HUD endeavors to draw a line of distinction regarding its role in the process and to underplay the "distress" nature of the sale.

HUD registered real estate brokers must follow strict advertising guidelines.

• Properties must not be advertised until the property is officially listed for sale on the M&M Contractor website. Properties must be advertised at the listing price and contain a reference to HUD.

• Advertising must not convey by word or design an impression that the advertising broker is the sole source of property information or that the broker enjoys any type of listing or sales advantage over other brokers.

• It must avoid the use of language that describes HUD Homes as distress sales. The word "foreclosure" is forbidden in HUD Homes advertising; the words "repo" and "repossession" are also unacceptable. Better language to use in advertising is "HUD Owned" and "HUD Acquired" or "Government Owned."

• All display advertising of HUD Homes must contain an Equal Housing opportunity logo, statement, or slogan.

• All ads must comply with Truth-In-Lending Act provisos. Details about financing are not allowed since this would require complete disclosure pursuant to the Act. Advertisements must not contain such statements as: maximum mortgage amount, loan term, or finance charges; the terms "no down payment" or "no closing costs"; and interest rate. The following are permissible: down payment statements that include a precise dollar amount, and general statements such as "easy terms available," "low down payment," and/or "HUD-insured financing available."

• Ads must contain flood plain notations where applicable, or other warning information as it appears on the HUD listing on the M&M Contractor website.

• Brokers must follow Fair Housing Act guidelines that prohibit housing discrimination based on race or color, national origin, religion, gender, familial status, or handicap. The Equal Housing Opportunity logo, statement, or slogan must be present on ads to the extent that the law requires it. The three options are:

  1. Logotype: If other logotypes are used in the same ad, the Equal Housing Opportunity logo should be of a size at least equal to the largest of the other logos. If no other logotypes are used, then the type should be bold display face, which is clearly visible. Alternatively, when no other logotypes are used, three to five percent of an ad may be devoted to the Equal Housing Opportunity statement.

  2. Statement: HUD properties are offered for sale to qualified purchasers without regard to the prospective purchaser's race, color, religion, sex, disability, familial status, or national origin.

  3. Slogan: "Equal Housing Opportunity."

• Brokers and real estate agents are not permitted to place business cards, flyers, or signs at HUD properties.

Published: September 19, 2006

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