You might want to think twice if you are considering buying a house from the federal government.
The National Public Radio reported on Monday that the Department of Housing and Urban Development (HUD) sells houses that are disproportionately located in flood-prone places.
“The agency does not fully disclose the potential costs and dangers of living in harm’s way, and some of these transactions have happened as local governments are buying out properties in the same areas to mitigate flood risk,” the report says.
People who bought homes from HUD in different states say that buyers don’t learn that their houses are in an official flood zone until they’ve made an offer or paid a nonrefundable deposit. Potential homebuyers get more information about flood risks and cost of flood insurance from private sellers than from HUD. No federal regulation requires the HUD to disclose flood risk to buyers.
Most of the homes the HUD sells are foreclosures from neighborhoods with lower median household income.
HUD spokesperson, Michael Burns, told NPR that the agency doesn’t choose the homes it sells and is likely to end up with homes that banks can’t or won’t sell because they are less marketable. Houses located in flood zones are considered less marketable because buyers need flood insurance.
“Ensuring that federal agencies, including HUD, have the right tools and policies in place to increase resilience nationwide is a key priority of the Biden-Harris Administration for combating climate change and building strong, equitable communities,” Burns said.
Flood-prone homes have been sold by the HUD in every state, but some of the hot spots are Louisiana, Florida and New Jersey.
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