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The US government is one of the largest guarantors of home and business loans in the world, in part because the US Government is also the backer and insurer for the Federal Deposit Insurance Corporation (FDIC), and the government is behind Fannie Mae, a federal program that provides assistance and home loans to a lot of American home buyers. Couple this with the Veterans Administration, IRS and several other government agencies, and you'll find that the government owns a lot of the paper underwriting home loans in the United States.
As with any kind of loan, there is always a risk of default, when the borrower defaults, the lender forecloses on the asset…and this is where government bank foreclosures opportunity comes in for you. The current housing market is in a contraction, after a long run up on home loans and assets in the first half of the decade, and as a result, the foreclosure rate is going up, though less so with federally backed loans than with those held by private banks.
Government bank foreclosures are often the real bargains on the real estate market. Because of the increased overhead in running a federal agency, government bank foreclosures tend to want to sell the properties off, and get them out of their assets list (and off their budget listings) as fast as possible. This allows someone looking for a good home at a decent price to get it quickly, and at a budget price. Indeed, homes that have been foreclosed by the department of Housing and Urban Development that haven't been sold after 6 months on the market often get sold for a dollar.
There are several sources for finding houses that have been brought to market by government bank foreclosures. While they usually aren't listed in the usual real estate listings, there are several online resources that make it easy, some of them run by the federal government.
When looking to buy a home that's available because of a government foreclosed home, keep a number of things in mind – first, if you can pay cash at the gate, you can often get them for even more significant discounts than the foreclosure listings would indicate. Another factor to consider is location – most government bank foreclosures tend to be out in rural areas. Some of the homes may be run down, or positively dilapidated. The government also sells homes abandoned after natural disasters; be sure to hire someone to inspect the home before you move in, and expect an extensive cleanup before you can move in.
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