HB-1-3550

(01-23-03) SPECIAL PN 

Revised (03-09-22) SPECIAL PN

SECTION 1: PRICING AND LISTING PROPERTIES

16.1 OVERVIEW

The Agency will make every effort to sell Real Estate Owned (REO) properties quickly 

and at the best possible price. Whenever possible, preference will be given to selling REO 

program property to buyers eligible for Direct or Guaranteed SFH programs. The authorized RD 

official mentioned throughout this chapter will depend on whether the state has centralized their 

foreclosure and REO processing with the Servicing and Asset Management Office (Servicing 

Office). For those states that have centralized their foreclosure and REO processing, the 

Servicing Office is the authorized RD official. For those states that have retained those 

functions, the State Director or designee is the authorized RD official.

Responsibilities for oversight of disposing of REO Properties is now referred to the 

Responsible Party identified by the Agency. The Responsible Party may be both the 

Servicing Office, the Field Office or an independent authorized government contractor.

A. Sale Methods and Pricing

Most REO properties are sold through real estate brokers. However, the Responsible Party 

may sell properties through sealed bid, auction, negotiation, or agreements with other Federal 

agencies, such as the Department of Housing and Urban Development (HUD).

REO housing for program eligible borrowers is initially priced for sale based upon its “as 

is” market value with adjustments made based on the Agency’s liquidation value factors which 

can be found in the SFH Direct SharePoint site. Administrative price reductions are to be taken 

over time to facilitate sale of the property (see Paragraph 16.3 B. for a discussion of price 

reductions). A schedule is published that restricts sales of program property to program-eligible 

buyers for a period of time before any offering to the general public.

An Affirmative Fair Housing Marketing Plan, as described in Paragraph 16.4 A., must be 

prepared when 5 or more REO properties are for sale in the same market area at the same time.

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CHAPTER 16: DISPOSING OF 

REAL ESTATE OWNED PROPERTY
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HB1-3550

Paragraph 16.1 Overview

B. Financing

When funds are available, the Agency may offer financing to buyers of REO property. 

When program credit is offered, the loan is processed following the loan origination procedures 

described in this handbook. If an REO property is sold for less than the appraised value to a 

program borrower, the equity credited to the borrower in the Form RD 3550-12, Subsidy 

Repayment Agreement is the difference between the selling price and the loan amount.

Nonprogram credit terms may be offered to investors or when the buyer is not eligible for 

Section 502 assistance or the property does not qualify as a program property. Investors and 

other nonprogram applicants are not subject to income eligibility, asset, citizenship or occupancy 

requirements to be extended credit. Chapter 11 provides instructions for processing loans on 

nonprogram terms. Buyers who receive financing on nonprogram terms must be advised that 

they are not eligible for payment subsidies or moratoriums.

C. Warranty

The Agency does not provide a warranty of either the title or the physical condition of 

any REO property except with regard to contamination from hazardous substances or petroleum 

products. Section 4 of this chapter provides additional guidance for managing hazardous 

substances when disposing of REO property.

D. LoanServ Processing for REO Sales

LoanServ tracks the progress of REO sales and activities. Agency staff will access 

LoanServ and update activity on specific properties.

16.2 CONTRACTING FOR SALESSERVICES

Agency personnel may sell REO property when staffing and workload permit, but sales 

are normally handled through the services of real estate brokers. The preferred method for 

obtaining broker services is to enter into an exclusive contract with a single broker. However, 

the Agency also may enter into open listing agreements that permit any licensed real estate 

broker to provide sales services. Once a broker has been employed, the Agency will refer all 

inquiries to that broker or to the list of participating brokers.
HB-1-3550

Paragraph 16.2 Contracting for Sales Services

A. Selecting Exclusive Brokers

Exclusive broker contracts are awarded on a competitive basis. In order to do business 

with the Agency, brokers must be properly licensed in the State in which they do business.

Attachment 16-A provides a sample solicitation package, sample broker qualifications, and 

criteria that may be used to evaluate offers from prospective brokers.

B. Announcing Open Listing

When an open listing method is used to obtain broker services, any licensed real estate 

broker can offer to provide the services. At least annually, the Agency should announce that 

sales services are being requested by advertising in a newspaper of general circulation or sending 

notices to all real estate brokers in the counties affected. Attachment 16-B provides a sample 

advertisement.

Brokers who respond in writing and are determined to be qualified will be designated as 

“participating brokers.” Each participating broker must execute Form 1955-42, Open Real 

Property Master Listing Agreement, which provides the terms and conditions under which the 

sales services are to be provided.

C. Commissions

Broker’s commissions will be negotiated as part of the selection process and are not paid 

until the sale has closed and title has passed to the purchaser. Commissions should not exceed 

the typical commissions paid for comparable services.

D. Broker Purchases of REOProperties

Participating brokers must notify the Agency whenever a participating real estate broker, 

the broker’s salesperson, a member of the broker’s or salesperson’s household, or a legal entity 

in which the broker or salesperson has an interest, buys REO property.

If Agency credit is required, no commission will be paid to participating brokers who 

purchase an REO property, and only half of the standard commission will be paid to a nonparticipating broker who purchases an REO property.

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(01-23-03) SPECIAL PN 

Revised (11-03-17) PN 505
HB-1-3550

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16.3 PRICING AND SALES SCHEDULES

REO pricing for program properties is based upon the as-is market value stated in the 

appraisal multiplied by the liquidation value factors posted on SharePoint. The liquidation value 

factors on SharePoint should not be applied to an appraisal report’s liquidation value, if 

applicable. Nonprogram properties are offered for sale at the lower of Net Recovery Value 

(NRV) or the appraised value multiplied by the applicable liquidation value factor. Additional 

administrative price reductions may reduce the offering price to facilitate the sale. Mineral, 

water, and similar rights are generally sold with the property and are not sold separately except 

when the Government’s security interest will not be jeopardized. Lease or royalty interests that 

do not pass by deed are assigned to the buyer.

A. Appraisals

To determine the property’s present market value, the Agency must arrange for an 

appraisal using the procedures described in Section 5 of Chapter 5. If repair or improvement is 

planned, the appraisal must provide both as-is and as-improved values. Each as-improved 

appraisal must include a list of the planned repairs. Any special flood or mudslide hazard areas 

or wetlands and any flood plain or wetland use restrictions must be reflected in the appraisal. All 

REO property considered for disposal or lease must be evaluated for possible contamination 

from hazardous substances or petroleum products through the process of due diligence and 

completion of Attachment 5-B as described in Paragraph 16.18. This will normally be 

completed at the same time as the appraisal.

A property must be reappraised whenever its condition has deteriorated, it has been 

significantly damaged or vandalized, additional repairs and improvements have been made, or 

there has been a change in market conditions. Be especially alert to potential contamination 

from unauthorized dumping while the property is owned by the Agency and, if necessary, update 

Attachment 5-B and the appraisal prior to sale or lease. The need for reappraisal should be 

established as quickly as possible so that the property is based upon its true value. Appraised 

value is not affected by administrative price reductions.

An appraisal with interior inspection should be ordered immediately after the Agency is 

informed that the foreclosure sale was unsuccessful, and the Agency has made a determination 

that the property will be offered initially to program eligible buyers. The appraisal must have an 

“as-is” market value and may include an “as-improved” value if repairs to the property are 

needed.
HB-1-3550

(01-23-03) SPECIAL PN 

Revised (03-09-22) SPECIAL PN

Paragraph 16.3 Pricing and Sales Schedules

B. Sales Schedules and Administrative Price Reductions [7 CFR 3550.251(c)(4)]

The sale of REO program property is reserved for sale to eligible Direct or Guaranteed 

SFH applicants or for sale or lease to nonprofit organizations or public bodies providing 

transitional housing and turnkey housing for tenants of such transitional housing, when a 

property is first offered for sale, for no less than 30 days after listing. Exhibit 16-1 provides the 

sales schedule for program property; Exhibit 16-2 provides the sales schedule for nonprogram 

properties. The sales price is fixed when a sales contract is executed and does not decrease 

further based upon scheduled price reductions.

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Exhibit 16-1

Sales Schedule for Single Family Housing REOProperty 

Program Property

DATES ACTION

Days 1-30 Available for sale exclusively to eligible Direct or Guaranteed SFH buyers for the “as-is” 

appraisal value multiplied by the applicable liquidation factor percentage found on the SFH 

SharePoint.

If the property is not under contract before the 31st day then the case will be referred to the authorized RD official 

and offered for sale as a nonprogram property. The authorized RD official will be consulted to determine the best 

sales method: public auction, sealed bid, continued listing, etc. If it continues as a listing, then it will enter the 

schedule outlined in Exhibit 16-2 as a day 31 property at 95% of the initially offered price.
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Paragraph 16.3 Pricing and Sales Schedules

Exhibit 16-2

Sales Schedule for Nonprogram REO Property

DATES ACTION

Days 1-30 Available for sale to anyone at the lower of the NRV or the “as-is” value of the appraisal

multiplied by the liquidation value factor onSharePoint.

Days 31-60 Available for sale to anyone following the preceding terms with an additional discount of 5%.

Days 61-120+ Available for sale to anyone for 10 percent less than then initial listed price. An additional 

discount of 5% occurs monthly until the property is under contract or it is determined that an 

alternative sales method is more likely to result in a sale.

Day 121 If not done already, discuss marketing efforts and consult with the authorized RDofficial for 

further advice on sales initiatives, to reappraise, or to authorize a sealed bid or public auction.

As a reminder, properties are available to eligible public bodies or nonprofits for transitional housing for the 

homeless at an additional discount of 10% with a term of 30 years and no required down payment. See

Paragraphs 16.10 B and C.

REO properties that do not sell after four months should be referred to the authorized RD 

official for consideration of other sale methods or to determine whether additional marketing 

efforts and incentives are needed.
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Revised (03-09-22) SPECIAL PN 

(This page was intentionally left blank.)

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01-23-03) SPECIAL PN
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HB-1-3550

SECTION 2: MARKETING

16.4 MARKETING AND ADVERTISEMENT

A good marketing plan is the key to 

reaching the maximum number of potential 

buyers and to ensuring that eligible Direct or 

Guaranteed SFH loan applicants have an 

opportunity to purchase REO properties. The 

Agency may advertise directly or contract for 

advertising services. Exclusive broker contracts 

may include advertising services. All 

advertisements must state occupancy or 

environmental restrictions.

A. Fair Housing and Affirmative Fair Housing Marketing Plan

All advertising must meet equal housing opportunity requirements and contain the equal 

housing opportunity statement and logo. An Affirmative Fair Housing Marketing Plan is 

required whenever there are 5 or more REO properties for sale in the market area at the same 

time. The plan remains in effect for 1 year or until all properties covered under the plan are sold, 

whichever is later. When an exclusive broker contract is used, the plan is prepared by the broker 

and approved by the State Director or Servicing Office. When a sale is conducted by the 

Agency or under an open listing agreement, the plan is prepared by the Agency and must be 

approved by the State Director or Servicing Office. RD Instruction 1901-E provides more 

guidance on civil rights requirements.

B. Truth in Lending Act (TILA) and Real Estate Settlement Procedures 

Act (RESPA) Integrated Mortgage Disclosures rule (TRID)

If the availability of Agency financing will be advertised, marketing efforts must conform 

to the requirements of the TRID. Exhibit 16-3 highlights these requirements.

C. Advertising and Marketing Methods

Advertising efforts should be designed to reach a broad audience. The Agency should 

identify appropriate marketing efforts and tailor them for each market area. At a minimum, the 

property should be posted on the USDA REO Sales website or designated site provided by 

Responsible Party and posted on the Agency office bulletin board. Other marketing efforts that 

may be appropriate include:

Property on Tribal Allotted or Trust Land 

[7 CFR 3550.251(c)(3)]

REO property located on tribal allotted or trust land 

will be sold or otherwise disposed of only to an 

eligible tribal member, the tribe, or to the Indian 

Housing Authority serving the tribe. Attachment 16-

C may be used as a guide in notifying these entities 

of an available property.
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(01-23-03) SPECIAL PN 

Revised (03-09-22) SPECIAL PN 

HB-1-3550

Paragraph 16.4 Marketing and Advertisement

• Posting advertisements in public 

locations accessible to prospective 

purchases, including community 

bulletin boards and major 

employment sites;

• Informing current and potential 

program applicants or investors of the 

availability of REO properties.

• Ensuring that the listing broker has 

the property listed (with pictures) on

popular internet home search sites such as the Multiple Listing Service, Realtor.com, 

Zillow, Redfin, or other popular sites in the local geographic area.

• Inform loan application packagers, nonprofits, and other stakeholders working in the 

property’s service area.

Sample advertisements are included in Attachment 16-D.

D. Review of Marketing for Unsold Properties

At least quarterly, the State Director or Servicing Office must review the status of 

unsold REO property to ensure that acquired properties are being placed on the market 

promptly, properties on the market are selling within a reasonable time frame, and that 

properties under contract are closed promptly. Of particular concern are properties:

• Acquired more than 30 days ago that have not yet been made available for sale;

• That have been available for sale for 3 months or more and are not under contract; 

and

• That have been under contract for more than 30 days and have not closed.

Exhibit 16-3 

TRID Highlights

• Advertisements that state specific credit 

terms must state only terms that will actually 

be offered.

• Any finance charge listed must be stated as 

an annual percentage rate.

• Key terms related to financing used in the 

advertisement must be defined.
HB-1-3550

16.5 SPECIAL MARKETING TECHNIQUES

A. Buyer Incentives

The State Director or Servicing Office may authorize buyer incentives when a specific 

market area is depressed and the incentives are commonly offered to stimulate buyer interest. To 

authorize buyer incentives, describe past efforts to sell similar properties and explain why the 

proposed incentives are expected to produce improved results. Incentives, such as offering to 

provide one or more home appliances or to pay closing costs, may be appropriate for any 

property. Seller concessions for program applicants should not create overages where the buyer 

receives cash at closing beyond their out-of-pocket expenses such as the earnest money, 

inspection costs, homeowner’s insurance, etc. Amortization schedules longer than the standard 

term may be offered for nonprogram properties.

B. Broker Incentives

When an additional broker incentive is needed, such as when a very low-value property 

offers an inadequate commission, the State Director or Servicing Office may authorize a 

minimum commission or fixed-amount sale bonus. To authorize broker incentives, describe 

the past efforts to sell the property and justify the amount and the purpose of the incentive. 

Upon the approval of the State Director or Servicing Office, a written offer of the incentive 

that specifies the requirements and circumstances in which the incentive will be given must be 

provided to the broker.

C. Acquisition of Land, Easements, or Rights-of-Way to EffectSale

When it will help the sale of REO property and it is in the best interest of the 

Government, the State Director or Servicing Office may authorize the acquisition of adjacent 

land, easements, or rights-of-way in order to cure title defects or encroachments. Additional land 

may not be acquired at a cost in excess of its appraised market value.

16.6 REO PROPERTY NOT MEETING AGENCYSTANDARDS 

[7 CFR 3550.251(c) (2)]

When REO property does not meet the Agency’s standards of being decent, safe and 

sanitary (DSS) and it is not economically feasible for the Government to repair it, the property is 

listed, advertised, and sold with specific occupancy restrictions.

16-10
HB-1-3550

16-11

(01-23-03) SPECIAL PN 

Revised (11-03-17) PN 505

Paragraph 16.6 REO Property Not Meeting DSS Standards [7 CFR 3550.251(c) (2)]

DSS housing is defined as housing that meets the requirements described in RD

Instruction 1924-A for existing construction. If the housing does not meeting the 

requirements, it still may be considered DSS if it:

• Is structurally sound and habitable;

• Has a potable water supply;

• Has functionally adequate, safe, and operable heating, plumbing, electrical and 

sewage disposal systems;

• Is energy efficient; and

• Is safe - that is, a hazard does not exist that would endanger the health or safety of 

occupants.

The deed by which such a property is conveyed will contain a covenant restricting it from 

residential use until it meets the Agency’s dwelling standards, as discussed in Section 2 of 

Chapter 5. Property that is not DSS must still meet the Agency’s environmental requirements, 

including the management of hazardous substance requirements discussed in Section 4 of this 

chapter.

In the event that the Agency has acquired property that is unsafe and cannot feasibly be 

made safe, for reasons that are environmental in nature or relate to contamination from 

hazardous substances or petroleum products, the Agency will provide appropriate information to 

the State Environmental Coordinator or Program Support Staff for their review and guidance.

A. Notice of OccupancyRestriction

The notice of sale and sale contract must describe the specific conditions that prohibit 

occupancy and the items necessary for the property to meet DSS standards, using Form RD 

1955-44, Notice of Residential Occupancy Restriction or language similar to the following:

“Pursuant to section 510(e) of the Housing Act of 1949, as amended, 42 U.S.C. 1480(e), 

RHS has determined the dwelling on this property inadequate for residential occupancy. The 

quitclaim deed by which this property will be conveyed will contain a covenant restricting it 

from residential use until the dwelling is repaired or renovated as follows:” (Insert those 

items necessary for the property to meet DSS standards.)
HB-1-3550

16-12

Paragraph 16.6 REO Property Not Meeting DSS Standards [7 CFR 3550.251(c) (2)]

For purposes of advertising, the list of specifications may be replaced with a statement to 

contact the Agency, or the real estate broker under an exclusive listing contract or “any real 

estate broker” for open listing agreements, whichever is relevant, for a list of specific items 

necessary for the property to meet DSS standards.

B. Quitclaim Deed Restrictive Covenant

The quitclaim deed must contain a covenant restricting residential occupancy which 

describes the conditions which prohibit occupancy and the specific items necessary for the 

property to meet DSS standards, using Form RD 1955-44 or language in a State Supplement, 

similar to the following:

“Pursuant to Section 510(e) of the Housing Act of 1949, as amended, 42 U.S.C. 1480(e), the 

purchaser (‘Grantee’ herein) of the above described property (‘subject property’ herein) 

covenants and agrees with the United States acting by and through the U.S. Department of 

Agriculture (‘Grantor’ herein) that the dwelling unit located on the subject property as of the 

date of this quitclaim deed will not be occupied or used for residential purposes until the 

item(s) listed at the end of this paragraph have been accomplished. This covenant shall be 

binding on Grantee and Grantee’s heirs, assigns and successors and will be construed as both 

a covenant running with the subject property and as equitable servitude.

This covenant will be enforceable by the United States in any court of competent jurisdiction. 

When the existing dwelling unit on the subject property complies with the aforementioned 

standards of the U.S. Department of Agriculture in accordance with its regulations, the 

subject property may be released from the effect of this covenant and the covenant will 

thereafter be of no further force or effect. The property must be repaired as follows:” (Insert 

the items referenced in the notice of sale and sale contract, necessary for the property to meet 

DSS standards.)

C. Release of Restrictive Covenant

When the owner requests a release of the restrictive covenant, the Agency inspects the 

property. The Agency will provide to the owner a release of the covenant if the conditions which 

prohibited occupancy have been corrected, the specific items necessary for the property to meet 

DSS standards have been provided, or the structure necessitating the restrictive covenant has 

been removed from the site. The owner will be responsible to file such release and any related 

filing costs.
(01-23-03) SPECIAL PN 

Revised (03-09-22) SPECIAL PN 

HB-1-3550

16-13

SECTION 3: SALE METHODS

16.7 REGULAR SALE METHOD

No offers to purchase an REO property will be accepted until the property is officially 

offered for sale. Any offers received before the property is offered for sale must be returned to 

the offeror. 

The Responsible Party shall follow the standards and procedures in 42 U.S.C. 11408a 

for the sale or lease of an REO property to a public agency or nonprofit organization. The 

terms of the sale and lease, and the entity seeking to purchase or lease the REO property, must 

meet the requirements in 42 U.S.C. 11408a.

A. Listing the Property

REO property is offered for regular 

sale using Form RD 1955-43, Notice of Real 

Property for Sale (Single Family Housing). 

The date indicated on Form RD 1955-43 is the 

effective date of the offer. An offer may be 

submitted at any time after the effective date 

listed in the notice.

When an offer is accepted, the notice 

of sale is revised to indicate that only back-up 

offers will be taken. The notice is not 

withdrawn until the sale is closed, except 

when the offer is from a nonprofit 

organization or a public body for transitional 

housing for the homeless.

B. Submission Requirements

An offer to buy must be submitted on Form 1955-45, Standard Sales Contract, Sale 

of Real Property by the United States. Offers received in any other form must be returned to 

the offeror. Any offer that is made contingent upon Agency credit should be accompanied 

by a completed Form RD 410-4, Application for Rural Assistance (Nonfarm Tract) 

Uniform Residential Loan Application.

C. Receiving and Considering Offers

Each offer must be date stamped when it is received. For no less than 30 days after a

REO Property Subject to Redemption Rights

REO property subject to redemption rights 

may still be sold if the Agency determines that 

there is low probability of its redemption and 

State law permits its sale. In States where such 

sales are permitted, a State Supplement will be 

issued with the specific State law requirements. 

The buyer must sign a statement acknowledging 

sale conditions under State law. The original 

signed statement will be filed in the REO file and 

transferred to the borrower’s case file if it is 

Agency financed.

program REO property is listed for sale, the property will be reserved for sale to eligible Direct or 

Guaranteed single family housing very-low, low, or moderate income applicants and for sale or lease to 

nonprofit organizations or public bodies providing transitional housing and turnkey housing for tenants 

of such transitional housing in accordance with 42 U.S.C. 11408a.
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16-14

Any offer on a program property from a person or organization, other than a Direct or 

Guaranteed SFH applicant or an organization or public body providing transitional housing,

during the 30-day reservation period will be held and considered received on the 31st day.

Offers received on the same business day are selected in the following order:

1. An offer from an eligible Direct or Guaranteed SFH loan-applicant with a request for 

credit on program terms. All program offers are evaluated as if they were submitted 

at the listed price, regardless of the offering price. Priority of offers received the 

same day from eligible Direct or Guaranteed single family housing applicants will 

be given to applicants qualifying for veterans’ preference. 

2. An offer from a nonprofit or public body for conversion to use as transitional 

housing, multifamily housing, or for other special purposes as specified in 7CFR Part 

3550, Section 3550.251(d).

3. A cash offer, from the highest to the lowest.

4. A nonprogram credit offer, from the highest to the lowest. 

Acceptable offers of equal priority received on the same business day are selected by 

lot. When selection is by lot, offers drawn after the first are held as back-up and the offeror so 

notified.

The Responsible Party selects the first minimum acceptable offer received and executes 

Form RD 1955-45. Form RD 1955-45 is sent to the bidder along with Handbook Letter 

10(3550), ‘Status of Offer to Buy Single Family Housing REO Property,’ and Handbook Letter 

10(3550) is sent to the bidder’s broker. Handbook Letter 10(3550) also is used to notify all 

unsuccessful bidders of the status of their offers.

D. Earnest Money

The notice of sale must specify any earnest money requirements. No earnest money will 

be collected when Agency staff conduct the sale. In broker assisted sales, an earnest money 

deposit in an amount that is customary for the market, is required when the sales contract is 

signed. Earnest money is held by real estate brokers and is applied to the purchaser’s closing 

costs.

E. Cancellation of Sales Contracts

If an offer contingent upon obtaining Agency financing on program terms is selected and 

the credit request is subsequently rejected, the next offer is considered.

Paragraph 16.7 Regular Sale Method
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(01-23-03) SPECIAL PN 

Revised (03-09-22) SPECIAL PN 

Paragraph 16.7 Regular Sale Method

Property is not held off the market pending the outcome of an appeal. If there are no back-up 

offers, the notice of sale is revised to indicate the new status of the property.

When a sales contract is canceled due to offeror default, any earnest money collected is 

forwarded to the local Agency office where it will in turn be forwarded to the Servicing Office 

for application to the General Fund.

16.8 DISPOSITION BY SEALED BID ORAUCTION

The Responsible Party may authorize the sale of an REO property by sealed bid or 

public auction when it is in the best interest of the Government. 

A. Establishing the Minimum Acceptable Offer

The Responsible Party must develop and document the recommendation for the 

minimum acceptable bid or sales price using the Net Recovery Value worksheet provided in 

Handbook-2- 3550, Attachment 6-A.

B. Publicizing the Sale

The Responsible Party solicits sealed bids or publicizes an auction by public notice. The 

notice must include the date, time, and place of the bid opening or auction, describe how bids 

are to be made, the required percentage of bid deposit, the maximum credit terms, the cash 

preference percentage described in Paragraph 16.8 C.3., and other pertinent information, such as 

occupancy restrictions, or notice of special flood or mudslide hazard area or wetland.

C. Sealed Bid Procedures

Sealed bids must be made on Form RD 1955-46, Invitation Bid and Acceptance-Sale of 

Real Property by the United States and be accompanied by a deposit provided in the form 

specified in the bidding instructions. No deposit is required from bidders who are eligible 

program purchasers. A minimum deposit of 10 percent is required for nonprogram loans.
HB-1-3550

16-16

Paragraph 16.8 Disposition by Sealed Bid or Auction

1. Receiving and Opening Bids

All bids will be date and time stamped when they are received. Sealed bids will be 

held in a secured file before bid opening. The bid opening will be held publicly at the 

place and time specified in the notice with at least 2 Agency employees present. Each 

bid received will be recorded showing the name and address of the bidder, the amount of 

the bid, the amount and form of deposit, and any conditions of the bid. The record of 

bids will be signed by the staff person conducting the bid opening and retained in the 

REO file.

2. Reviewing and Accepting Bids

Only responsive bids will be considered. To be considered responsive, bids must be 

signed and dated by the offeror, include any required deposit, and be for an amount at 

least equal to the established minimum bid. Minor deviations or defects in the bid 

submission may be waived by the Responsible Party so long as the bid meets these 

minimum requirements.

Generally, the highest bid will be selected. However, cash bids will be given preference 

over bids that are contingent upon the offeror obtaining financing if the cash offer is at least 

equal to a specified percentage of the highest offer. Exhibit B of RD Instruction 440.1 

specifies the applicable percentage.

In the case of identical bids for a program property eligible Direct or Guaranteed SFH 

loan, purchasers will be selected by lot before bidders who are not eligible for a Direct or 

Guaranteed SFH loan.

3. No Acceptable Bid

If no acceptable bids are received, the Responsible Party may negotiate a sale at the 

best price possible in accordance with Paragraph 16.9. All bidders must be informed, in 

writing, of any anticipated negotiations. Deposits must be returned to all bidders by 

certified mail, return receipt requested.

4. Notification to Bidders

The Responsible Party sends Handbook Letter 10 (3550) to notify unsuccessful 

bidders that their bids were not accepted and who the successful bidder was. 

Deposits must be returned to all unsuccessful bidders by certified mail, return receipt 

requested.

When a bid is accepted, the Responsible Party executes Form RD 1955-46 and sends 

Handbook Letter 10 (3550), Status of Offer to Buy Single Family Housing REO 

Property.
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(01-23-03) SPECIAL PN 

Revised (03-09-22) SPECIAL PN

Paragraph 16.8 Disposition by Sealed Bid or Auction

5. Failure to Close

If a successful bidder fails to perform under the terms of the offer for any reason other 

than denial of credit by the Agency, the bid deposit will be forfeited and forwarded to the 

Servicing Office for application to the General Fund.

Upon determination that the successful bidder will not close, the Responsible Party

may authorize direct negotiations with the next highest bidder, authorize another sealed

bid sale, or authorize negotiations with other interested parties, as described in 

Paragraph 16.9.

D. Auction Procedures

The Responsible Party will determine who will conduct the auction or whether the 

complexity of the sale requires the services of a professional auctioneer. Form 1955-46, 

Invitation Bid and Acceptance-Sale of Real Property by the United States, is used for auction 

sales.

1. Selecting a Professional Auctioneer

Auctioneers are selected through the procurement process as described in RD 

Instruction 2024-A. The commission will be set as part of the auctioneer solicitation. If an 

auctioneer submits a bid with a commission rate that is significantly lower than other bids, 

detailed documentation will be provided attesting that they have successfully sold properties 

at the lower rate with no compromise in service.

2. Bid Deposits

Successful bidders will be required to make a bid deposit of 10 percent of the sales 

price, except this fee will be waived for eligible Direct or Guaranteed SFH bidders, 

pending final determination of eligibility. Deposits should be in the form of cashier’s 

check, certified check, postal or bank money order, or bank draft payable to the Agency. 

Cash and/or personal check may be accepted only if deemed necessary for a successful 

auction to occur by the person conducting the auction.
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Paragraph 16.8 Disposition By Sealed Bid or Auction

3. Accepting Bids

When the highest bid is lower than the minimum amount acceptable to the Agency, 

negotiations should be conducted with the highest bidder or, in turn, the next highest 

bidder(s) or other persons known to be interested to obtain an executed bid at the 

predetermined minimum.

4. Purchaser’s Default

Upon purchaser’s default, the Agency will retain the bid deposit as a Miscellaneous 

Collection. The property may then be disposed of through a negotiated sale.

16.9 NEGOTIATED SALE

If no acceptable bid is received either from a sealed bid sale or at a public auction, the 

Responsible Party may negotiate a sale at the best price possible without further public notice 

by negotiating with interested parties, including previous bidders.

A sale made through negotiation will be documented and accepted by the

Responsible Party on Form RD 1955-46, Invitation Bid and Acceptance-Sale of Real 

Property by the United States and must be accompanied by a bid deposit of 10 percent of the 

negotiated sales price, except that the deposit will be waived for program-eligible buyers.

16.10 DISPOSAL OF PROPERTY FOR SPECIAL PURPOSES [7 CFR 3550.251(d)]

REO properties may benefit people in need of housing who can be reached in cooperation 

with other programs or Federal agencies. Cooperative agreements with other Federal or Stateassisted housing programs will be announced and updated with Administrative Notices.

A. Multifamily Housing

Multiple units of REO property may be sold as multifamily housing. In this case, the 

properties and the applicants must meet the requirements for the loan program under which the 

sale is proposed.

B. Transitional Housing for the Homeless

Upon request from a public body or nonprofit organization, the Agency provides a list of 

available REO property. Upon receipt of written notice from the entity of its intent to buy or 

lease the property, the Agency withdraws the property from the market for a period not to 

exceed 30 days for the purpose of negotiations. If negotiations are unsuccessful, the REO 

property will be relisted and sold in the best interest of the Government. 
(01-23-03) SPECIAL PN 

Revised (03-09-22) SPECIAL PN

16-19

HB-1-3550

Paragraph 16.10 Disposal of Property for Special Purposes [7 CFR 3550.251(d)]

An earnest money deposit is not required.

1. Price

If the entity wants to buy a property, the currently listed price is discounted by an 

additional 10 percent. 

2. Repairs to Meet DSS Standard

If the entity wants to buy a nonprogram property that does not meet DSS standards, 

the Agency repairs it to remove health or safety hazards unless cost of the repairs is 

prohibitive. Cosmetic repairs such as painting, floor covering, landscaping, and repairs to 

improve thermal performance are the responsibility of the buyer. All repairs or 

renovations to make the property habitable and to meet DSS standards should be 

discussed, put in writing, and made part of the sale contract. However, the environmental 

requirements, including the requirements for management of hazardous substances and 

petroleum products, discussed in Section 4 of this chapter must be followed. The Agency 

shall abate all identified lead based paint hazards in all REO properties built before 1960.

C. Affordable Housing [7 CFR 3550.251(c)(4)]

REO property may be sold under special provisions to nonprofit organizations or public 

bodies for the purpose of providing affordable housing to very low and low-income families in 

accordance with 42 U.S.C. 11408a. Organizations that purchase REO property for transitional 

housing purposes may do so at a discount of no more than ten percent (10%) of the currently 

offered price. For any REO property, no earnest money deposit is required. Further, the 

Agency will offer financing on nonprogram rates and up to 30 year terms, with no down 

payment required. Special terms, listed in Chapter 11, can be considered, depending upon the 

planned use of the property and repayment ability.

Properties will be reserved for sale to eligible Direct or Guaranteed single family housing 

very-low, low, or moderate income applicants and for sale or lease to nonprofit organizations or 

public bodies providing transitional housing for tenants of such transitional housing in 

accordance with 42 U.S.C. 11408a. After receiving a written request from an organization for 

the purchase of an REO property, the Agency will withdraw the property from the market for up 

to 30 days in order to negotiate a purchase agreement.
HB-1-3550

16-20

16.11 DISPOSAL AS CHATTEL ORSALVAGE

If the Agency is unable to sell nonprogram property by regular sale, sealed bid, or public 

auction, the structure may be sold as chattel or salvage to be removed from the site. Form RD 

1955-47, Bill of Sale “A” is used to transfer title of real property converted to chattel to the 

purchaser.

If no offer is received to remove the structure, the Responsible Party may contract or 

arrange to have it demolished, in exchange for the salvaged materials or otherwise as determined 

appropriate. For example, the local firefighting unit may be permitted to use a structure slated for 

demolition as a burn for firefighting practice. Once the structure is disposed of, the lot will be 

offered for sale as nonprogram REO property.

For example, the local firefighting unit may be permitted to use a structure slated for 

demolition as a burn for firefighting practice. Once the structure is disposed of, the lot will be 

offered for sale as nonprogram REO property.

If REO property is a vacant lot, the lot is offered for sale as nonprogram property.
(01-23-03) SPECIAL PN 

Revised (11-03-17) PN 505

HB-1-3550

SECTION 4: ENVIRONMENTAL REQUIREMENTS

16.12 OVERVIEW

The Agency must complete the appropriate level of environmental review under the 

National Environmental Policy Act for disposal of REO property in accordance with RD 

Instruction 1970 series “Environmental”. The proposed disposal of REO property will normally 

qualify as a categorical exclusion. However, an environmental assessment, and when necessary an 

EIS, is required for any proposed disposal of REO property that meets one of the following 

criteria:

• The Agency has reason to believe the transaction would result in a change in use of 

the REO property within the reasonably foreseeable future.

• There is a violation of applicable Federal, state, or local statutory, regulatory, or 

permit requirements for environment, safety, and health.

• Conditions on the site are likely to cause uncontrolled or unpermitted releases of 

hazardous substances, pollutants, contaminants, or petroleum and natural gas 

products.

• There is an existence of controversy based on effects to the human environment 

brought to the Agency’s attention by a Federal, tribal, state, or local government 

agency.

• The property has an adverse effect on the following environmentalresources:

o Historic properties;

o Federally listed threatened or endangered species, critical habitat, Federally 

proposed or candidate species;

o Wetlands (those actions that propose to convert or propose new construction in 

wetlands will require consideration of alternatives to avoid adverse effects and 

unwarranted conversions ofwetlands);

o Floodplains (those actions that introduce fill or structures into a floodplain or 

propose substantial improvements to structures within a floodplain will require 

consideration of alternatives to avoid adverse effects and incompatible 

development in floodplains. Actions that do not adversely affect the hydrologic 

character of a floodplain, such as buried utility lines or subsurface pump stations, 

would not create an extraordinary circumstance; or purchase of existing structures 

within the floodplain will not create an extraordinary circumstance but may 

require consideration of alternatives to avoid adverse effects and incompatible 

development in floodplains when determined appropriate by the Agency);

16-21
HB-1-3550

Paragraph 16.12 Overview

o Areas having formal Federal or state designations such as wilderness areas, parks, 

or wildlife refuges; wild and scenic rivers; or marine sanctuaries;

o Special sources of water (such as sole source aquifers, wellhead protection areas, 

and other water sources that are vital in a region);

o Coastal barrier resources or, unless exempt, coastal zone management areas; and

o Coral reefs.

This section summarizes the basic environmental information that pertains to disposal of 

REO properties. For more detailed information and assistance, refer to RD Instruction 1970 

series “Environmental” or consult the State Environmental Coordinator.

16.13 PROPERTY LOCATED WITHIN A SPECIAL FLOOD ORMUDSLIDE 

HAZARD AREA OR CONTAINSWETLANDS

REO property located in a special flood or mudslide hazard area will not be sold for 

residential purposes unless it is determined safe—that is, any danger that exists by virtue of the 

floodplain location is not likely to endanger the health or safety of the occupants—and prior 

written notice of the specific hazard is given.

Form RD 1955-46, “Invitation Bid and Acceptance-Sale of Real Property by the United 

States,” must include notice of special flood or mudslide hazard areas or wetlands and related use 

restrictions. Prospective purchasers, auctioneers, and brokers must be informed and 

acknowledge receipt of notice of these circumstances, and all advertisements need to reference 

them.

The conveyance instrument for disposal of REO property containing wetlands or located 

in a special flood or mudslide hazard area must specify those uses of the property that are 

restricted under any Federal, State or local floodplain and wetland regulations, as well as other 

appropriate restrictions. Use restrictions will relate to the use of the property by the purchaser 

and any successors as determined by the Agency. Examples of use restrictions include 

prohibition of draining or filling of floodplain or wetland areas, prohibition of new above-ground 

construction on that portion of the property located in the floodplain or wetland area, and

prohibition against subdividing floodplain or wetland property into building lots.

16.14 COASTAL BARRIER RESOURCES SYSTEMS [7 CFR 1955.137(a)]

REO property located within a Coastal Barrier Resources System (CBRS) will not be sold 

until the State Environmental Coordinator has consulted with the appropriate Regional Director of 

the U.S. Fish and Wildlife Service, and the Regional Director concurs that the proposed sale does 

not violate the provisions of the Coastal Barrier Resources Act (CBRA).
16-22
(01-23-03) SPECIAL PN 

Revised (11-03-17) PN 505

HB-1-3550

Paragraph 16.14 Coastal Barrier Resources System 7 CFR 1955.137(a)

No Federal financing is permitted for REO properties located within a CBRS, since flood 

insurance under the National Flood Insurance Program is not available for properties within the 

CBRS.

16.15 NATIONAL REGISTER OF HISTORICPLACES

When REO property has been determined to be listed on (or eligible to be listed on) the 

National Historic Register, the Loan Approval Official responsible for conveyance must consult 

with the State Historic Preservation Officer (SHPO) in order to establish any necessary 

restrictions on the use of the property so that the future use will be compatible with preservation 

objectives as long as it does not result in an unreasonable economic burden to public or private 

interest. The Advisory Council on Historic Preservation must be consulted by the Loan 

Approval Official after the discussions with the SHPO are concluded.

Any restrictions that are developed on the use of the property as a result of the above 

consultations must be made known to potential bidders or purchasers through all advertisements 

and notices regarding the property, as well as in writing when the prospective purchaser signs the 

bid or offer to purchase. Acknowledgment of receipt of this notice will be obtained from the 

purchaser at that time and kept in the file.

If the property is located on Tribal land or in Indian country, additional consultation with 

the Tribal Historic Preservation Officer should also be initiated.

16.16 PROTECTIVE COVENANTS ANDEASEMENTS

The Agency has an affirmative responsibility to take actions to protect environmental 

resources located on REO property before that property is disposed of. “Affirmative

responsibility” refers to the fact that there are certain protections that are required by Federal, 

State, or local environmental laws. Frequently, such protective actions or mitigation measures 

will take the form of a covenant or conservation easement. In addition to floodplains, wetlands, 

coastal barriers, and historic places, this affirmative responsibility also extends to the following 

resources:

• Listed or proposed endangered or threatened species;

• Listed or proposed critical habitat;

• Designated or proposed wilderness areas;

16-23
16-24

HB-1-3550

Paragraph 16.16 Protective Covenants and Easements

• Designated or proposed wild or scenic rivers;

• Natural landmarks listed in the National Register of Natural Landmarks;

• Sole source aquifer recharge areas designated by EPA;

• Designated national trails;

• Important farmland; or

• Areas of high water quality.

The State Environmental Coordinator should be consulted if it appears that the proposed 

disposal of REO property may involve any of these resources.

16.17 REPORTABLE UNDERGROUND STORAGETANKS

When disposing of REO property containing reportable underground storage tanks as 

described in Paragraph 15.7 A.4., the Agency, if it has not already done so, must file the 

appropriate report with the State agency identified by the Environmental Protection Agency 

(EPA). The potential purchaser of the property will be informed by the Loan Approval Official 

of the reporting requirement and provided a copy of the filed report.

16.18 MANAGEMENT OF HAZARDOUS SUBSTANCES ANDPETROLEUM 

PRODUCTS

All REO property considered for disposal must be evaluated for possible hazardous 

substance contamination. To do this, the Loan Approval official completes Attachment 5-B as 

the initial level of inquiry in the due diligence process.

If Attachment 5-B was completed prior to acquisition of the property, the RD Official 

must determine if the document should be updated. If the completed or updated Attachment 5-B 

indicates potential contamination, it will be sent promptly to the State Environmental 

Coordinator for further evaluation and guidance. All clean-up actions will be taken under the 

guidance of the State Environmental Coordinator.

If Attachment 5-B was completed prior to acquisition of the property, the RD Official 

must determine if the document should be updated. If the completed or updated Attachment 5-B 

indicates potential contamination, it will be sent promptly to the State Environmental 

Coordinator for further evaluation and guidance. All clean-up actions will be taken under the 

guidance of the State Environmental Coordinator.
(01-23-03) SPECIAL PN 

Revised (11-03-17) PN 505

HB-1-3550

Paragraph 16.18 Management of Hazardous Substance and Petroleum Products

When disposing of REO property, prospective purchasers, lessees, or tenants will be 

notified of any possible contamination of the property by releases of hazardous substances, 

hazardous wastes or petroleum products, as well as any information concerning any clean-up 

activities by attaching to the deed or lease:

A statement that a report of the Agency’s investigation into potential contamination at the 

site (the due diligence report) and a description of any clean-up activities is available for public 

review or has been made available to the purchaser or lessee; and

A statement that the Agency does not provide warranty regarding the accuracy of the 

information in the due diligence report or the effectiveness of any clean-up activities.

16.19 LEAD-BASED PAINT

The Agency’s Lead-Based Compliance Key must be utilized for all REO properties. The 

Agency has adopted the following subparts of the lead based paint regulation, 24 CFR part 35:

Subpart A, “Disclosure of Known Lead Based Paint Hazards Upon Sale or Lease of 

Residential Property”

Subpart B, “General Lead Based Paint Requirements and Definitions”

Subpart C, “Disposition of Residential Property owned by a Federal Agency other than 

HUD”

Subpart D, “Project-Based Assistance Provided by a Federal Agency Other than HUD” 

Subpart J, “Rehabilitation (applicable sections)”

Subpart R, “Methods and Standards for Lead Based Paint Hazard Evaluation and Hazard 

Reduction Activities.”

The requirements of these subparts are applicable to all housing constructed prior to 1978 

that is financially assisted by the Agency or is being sold by the Agency.

16-25
HB-1-3550

SECTION 5: PROCESSING AND CLOSING

16.20 OVERVIEW

If the Agency is closing the sale with program financing, the sale is closed in accordance 

with program closing instructions provided in Chapter 8. If other financing is being used, the 

financing agent’s closing procedures should be followed. Cash sales are closed by the Agency 

collecting the sale price and delivering the Quitclaim Deed to the buyer.

Title clearance and property insurance requirements for a program financed sale are the 

same as for a program loan.

16.21 SPECIAL NOTICES AT SALE

A. HUD Insured Financing

If necessary to effect a sale with HUD-insured financing, the Agency may execute a sales 

contract amendment containing the following language:

“It is expressly agreed that, notwithstanding any other provisions of the contract, the 

purchaser shall not be obligated to complete the purchase of the property described herein or 

to incur any penalty by forfeiture of earnest money deposits or otherwise unless the seller has 

delivered to the purchaser a written statement issued by the Federal Housing Commissioner 

setting forth the appraised value of the property (excluding closing costs) of not less than $ 

(insert sales price) which statement the seller hereby agrees to deliver to the purchaser 

promptly after such appraised value statement is made available to the seller. The purchaser 

shall, however, have the privilege and option of proceeding with the consummation of the 

contract without regard to the amount of the appraised valuation made by the Federal 

Housing Commissioner. The appraised valuation is arrived at to determine the maximum 

mortgage the Department of Housing and Urban Development (HUD) will insure. HUD 

does not warrant the value nor the condition of the property. The purchaser shall satisfy 

himself/herself that the price and condition of the property are acceptable.”

B. Disclosure of Lead-Based Paint or Hazards

In accordance with the Residential Lead-Based Paint Hazard Reduction Act of 1992, 

sellers of housing receiving Federal assistance built before 1978 must provide the purchasers of 

such housing with specific information about the housing’s lead history and general information 

on lead exposure prevention. As seller the Agency must:

• Provide the buyer with the lead hazard information pamphlet, Protect Your Family 

from Lead in Your Home, available from the National Lead Information 

Clearinghouse at 1-800-424-LEAD, or a similar EPA-approved pamphlet developed 

by the State;

16-26
(01-23-03) SPECIAL PN 

Revised (03-09-22) SPECIAL PN 

HB-1-3550

Paragraph 16.21 Special Notices At Sales

• Permit the buyer a 10-day opportunity to conduct a risk assessment or inspection for 

the presence of lead-based paint hazard; and

• Include in the sales contract: (1) For a property constructed after 1959 and before 

1978, a disclosure of any lead-based paint hazard; (2) a list of any information about 

the hazard available to the seller and passed on to the buyer; and (3) a Lead Warning 

Statement and acknowledgment, signed by the buyer. A sample disclosure format, 

including the required Lead Warning Statement, is provided in Appendix 12.

• For a program property constructed before 1960, abate all identified lead-based paint 

hazards in accordance with 40 CFR 745.227.

• For a nonprogram property containing lead-based paint hazards constructed before 

1960, the use of an occupancy restriction is authorized in accordance with 16.6. The 

purchaser will meet the requirements of 24 CFR 35.210(b) and provide the Agency 

with a clearance exam that shows all lead-based paint hazards have been abated prior 

to occupancy. Nonprogram REO properties located on Tribal allotted or trust land, or 

sold to a nonprofit organization or public body to provide transitional housing for the 

homeless are not authorized to be sold with an occupancyrestriction.

16.22 INSPECTION

An inspection of the property by the buyer should be scheduled immediately before 

closing to ensure the condition of the property and the resolution of any problems or 

discrepancies.

16.23 PRORATING REAL ESTATE TAXES AND/ORASSESSMENTS

When REO property is subject to taxation and/or assessments, they are pro rated between 

the Agency and the buyer, as of the date the title is conveyed. The Agency is responsible for all 

taxes and assessments accrued as of the settlement date, and the buyer is responsible for all taxes 

and assessment which accrue after the closing date. The Agency’s pro rata share is deducted from 

the proceeds of the sale at closing, if sufficient funds are available, or is paid under RD Instruction 

2024-A.

16.24 DOWN PAYMENT

When a down payment is made, it is collected at closing, identified by property 

identification number, purchaser’s name and case number, and remitted in accordance with 

program instructions.

16-27
HB-1-3550

16.25 PAYMENT OF POINTS

When a buyer is financing the purchase of property with another lender, the Agency may 

pay not more than 3 points if it is a customary requirement of the lender for payment by the 

seller and points are not paid (or increased) to reduce the interest rate.

The specific number of points to be paid by the Agency must be in the sales contract, and fixed 

as of the date the Agency accepts the contract. Payment is deducted from the funds due the 

Agency at closing and is reflected in the Closing Disclosure.

16.26 CLOSING EXPENSES

Agency expenses are deducted from sale proceeds when sufficient funds are available, and 

the sale is subject to the Truth in Lending Act and Real Estate Settlement Procedures Act Integrated 

Mortgage Disclosures (TRID) requirements, that is, an Agency financed sale or a cash sale 

financed by another lender. Sales subject to TRID requirements, whether by the Agency or another 

lender, are settled by a third-party closing agent who provides a Closing Disclosure to the seller, 

buyer and lender to document the distribution of sale proceeds and closing costs. When sufficient 

funds are not available or when the transaction is a cash sale, which is not subject to TRID 

requirements and therefore no Closing Disclosure is required, expenses are paid under RD 

Instruction 2024-A.

In program-financed sales, bid deposit and earnest money is applied to the buyer’s 

closing costs. Under a nonprogram credit sale, the buyer pays all closing costs.

16.27 COMMISSIONS

Commissions are paid at closing if there is sufficient cash from sale proceeds to cover the 

commission. If not, the Agency will pay the commission and charge it to the REO account as a 

recoverable cost.

16.28 TRANSFERRING TITLE

The Agency conveys the property to the buyer by Form RD 1955-49, Quitclaim Deed or 

other form of non-warranty deed approved by OGC. The Responsible Party signs the 

conveyance instrument, a copy of which is retained in the REO property case file. The buyer is 

responsible for recording the instrument.

16.29 REPORTING SALE

When the transaction is closed and the conveying instrument has been delivered, record 

disposition in the REO system. Real property which has been disposed of by means other than 

sale, including total loss or destruction, will also be reported in the REO System. Sale proceeds 

are forwarded to the Servicing Office to the General Fund.

16-28
HB-1-3550

Attachment 16-A

Page 1 of 1

ATTACHMENT 16-A 

SAMPLE SOLICITATION PACKAGE

• Financial capability.

I. BROKER QUALIFICATIONS

• Licensing in the State in which broker will be doing business.

II. RANKING CRITERIA FOR SELECTINGBROKERS

• Previous experience with REO properties.

• Membership in Multiple Listing Service (MLS).

• Advertising plans and proposed innovative promotion methods.

• Proximity to REO properties.

• Staffing commitment to sale of properties.

• Commission Rate. If a broker submits a bid with a commission rate that is 

significantly lower than other bids, detailed documentation will be provided attesting 

that they have successfully sold properties at the lower rates with no compromise in 

service.

(01-23-03) SPECIAL PN
(01-23-03) SPECIAL PN

HB-1-3550

ATTACHMENT 16-B

SAMPLE ADVERTISEMENT FOR BROKERS

Attachment 16-B

Page 1 of 1

Broker Solicitation: Advertisements for real estate broker services will be placed at 

least yearly in newspapers having general circulation in the area in which the property is located. 

The notice will usually be placed in both the residential property section and the public notice 

section, altered to describe whether the agreement is to be open or exclusive. An example 

follows.

Public Notice

Real Estate 

Brokers

The Rural Housing Service 

(RHS) has from time to time 

various Real Estate Owned 

(REO) properties for sale 

through brokers having

executed a listing agreement 

with the agency. Licensed real 

estate brokers may obtain 

additional information by 

writing or visiting the local 

RHS office located at 32 Penny 

Lane, Madison City, FL 32111 

or telephoning (904) 323-0010.

= EQUAL HOUSING 

OPPORTUNITY
ATTACHMENT 16-C 

NOTIFICATION OF AVAILABLE TRIBALPROPERTY

HB-1-3550

Attachment 16-C 

Page 1 of 1

Name of Tribe or Indian housing Authority 

Name, Title of Contact Person

Address 

RE:

Borrower Name: 

Borrower Address: 

Brief Legal Description of Security

Property: 

The above-named Rural Housing Service (RHS) single family housing borrower is in default on 

an Agency loan. The borrower may sell the property and RHS is authorized to transfer the 

account on program terms to an eligible member of the tribe who meets RHS program 

requirements, or on nonprogram terms to any eligible member of the tribe, the tribe, or the Indian 

housing authority servicing the tribe. 

We are asking for your help on the borrower’s behalf in locating a buyer for the property. 

If the borrower does not sell the property within a reasonable time, RHS may assign the 

promissory note and security instruments to the tribe or the Indian housing authority servicing 

the tribe.

Please let us know if you will be able to assist us in locating a buyer for the property or if 

you are interested in securing your interest in the property by buying the RHS promissory note 

and security instruments. Please contact me for further information.

CONTACT: 

PHONE: 

(01-23-03) SPECIAL PN
HB-1-3550

(01-23-03) SPECIAL PN

Attachment 16-D

Page 1 of 9

ATTACHMENT 16-D

SAMPLE ADVERTISEMENT OF AVAILABLE REO PROPERTIES

Regular Sale: Advertising is an essential marketing tool in sales by RHS personnel. 

Advertising will be accomplished by the appropriate servicing official in accordance with 

Section 1 of this chapter. Full and extensive use of advertising is recommended with the Agency 

having the discretion to develop creative and eye-appealing advertisements consistent with the 

real estate market and this handbook. Examples of advertisements are attached.

Example 1(A)

RHS

Investment Buy of the 

Month!

Price Slashed!

965 Della Street 

Anytown, USA

Minimum Price: $25,000

This attractive frame house offers 

tremendous potential for the handyman 

who is looking for a great house at a great 

price.

Financing available on excellent terms.

5% down, 10 year, 10.5% APR to 

nonoccupant/investors

2% down, 30 year term, 10.5% APR to 

owner/occupants.

All rates and terms are subject to change 

without notice.

Contact RHS at 123-4567 or our Exclusive 

Broker “Ace Realty” at 123-9876.

=EQUAL HOUSING

OPPORTUNITY
HB-1-3550

Attachment 16-D

Page 2 of 9

Example 1(B)

RHS

Home of the Week

Price Slashed!

82 Town Street 

Anytown, USA

=EQUAL HOUSING

OPPORTUNITY

Minimum Price: $30,600

This charming three bedroom, 1 1⁄2 bath 

cape cod is located in an attractive 

neighborhood close to town. This home has 

been repainted throughout, is in excellent 

condition and has new carpeting and 

appliances.

Financing available

To qualified RHS direct and guaranteed 

SFH loan applicants: nothing down, 33/38 

year financing, 10% APR with payment 

assistance available to qualified applicants

To nonprogram applicants: 5% down, 10-

year term, 10.5% APR to 

nonoccupants/investors.

2% down, 30-year term, 10.5% APR to 

owner/occupants.

All rates and terms are subject to change 

without notice.

Contact your local RHS Office at 123-4567 

or any real estate broker.
HB-1-3550

Attachment 16-D

Page 3 of 9

(01-23-03) SPECIAL PN 

Revised (11-03-17) PN 505

Example 1(C)

RHS

Attractive RHS 

Homes for Sale

Price Slashed!

82 Town Street 

Anytown, USA 

Minimum Price: $32,000

46 Aim Street 

Anytown, USA

Minimum Price: $29,000

Price Slashed!

22 Bee Street 

Anytown, USA

Minimum Price: $35,000

35 Cat Street See note below

Anytown, USA 

Minimum Price: $33,500

Financing Available on Excellent Terms!

To qualified RHS eligible direct or 

guaranteed SFH applicant:

Nothing down, 33/38-year financing, 10% APR with

Payment Assistance available to 

qualified applicants.

To nonprogram applicants:

5% down, 10-year term, 10.5% APR to 

nonoccupant/investors.

2% down, 30-year term, 10.5% APR to 

owner/occupants.

All rates and terms are subject to change without notice.

Contact your local RHS office at 123-4567 or any real 

estate broker.

=EQUAL HOUSING

OPPORTUNITY
HB-1-3550

Attachment 16-D 

Page 4 of 9

Example 1(D)

RHS

Homes Priced to Sell

PriceSlashed!

82 Town Street 

Anytown, USA 

Minimum Price: $32,000

46 Aim Street 

Anytown, USA

Minimum Price: $29,000 $26,500

Price Slashed!

22 Bee Street 

Anytown, USA

Minimum Price: $35,000

35 Cat Street See note below

Anytown, USA 

Minimum Price: $33,500 $30,250

Financing Available on Excellent Terms!

To qualifiedRHSdirect or guaranteed 

SFHloanapplicants:

Nothing down, 33/38 year financing, 10% APR with

Payment assistance available to 

qualified applicants.

To nonprogram applicants:

5% down, 10 year term, 10.5% APR to 

nonoccupant/investors.

2% down, 30 year term, 10.5% APR to 

owner/occupants.

Allrates and terms are subject to change without notice.

Contact yourlocalRHS office at 123-4567 or any real 

estatebroker.

Note on 35 Cat Street: Available for cash or nonprogram terms only.

This property contains a dwelling unit which RHS has deemed inadequate for 

residential occupancy. The Quitclaim Deed by with the property will be 

conveyed will contain a covenant restricting the residential unit on the 

property from being used for residential occupancy until the dwelling is 

repaired, renovated, or razed. This restriction is imposed pursuant to section

510(e) of the Housing Act of 1949, as amended 42 U.S.C. 1480. Contact 

RHS or any Realtor for a list of items which must be repaired/renovated.

=EQUAL HOUSING

OPPORTUNITY
HB-1-3550

Attachment 16-D

Page 5 of 9

(01-23-03) SPECIAL PN 

Revised (11-03-17) PN 505

Sealed Bid and Auction Sales: Advertising of sealed bid and auction sales is critical for a 

successful sale. Advertising will be consistent with the portions of this handbook governing the 

sale of property by sealed bid or auction. Examples of sealed bid and auction sale 

advertisements are attached.

Example 2(A) RHS

Sealed Bid Sale

Property Address: 123 14th Street, Anytown USA

The subject property has been extensively damaged 

by fire and requires major renovation or demolition. 

The lot contains 10,000 square feet, hookups to 

public water and sewage, and is suitable for 

reconstruction. Sealed bids will be accepted until 

Friday April 1, 1996 at 2:30 p.m. at which time all 

bids will be opened. The property will be sold to 

the highest bidder. All bids must be accompanied 

by a 5% bid deposit in the form of a certified check. 

Financing is available on Nonprogram terms only --

5% down, 10.5% APR, and 10-year repayment (all 

rates and terms are subject to change without 

notice), however preference will be given for cash. 

The government reserves the right to reject any or 

all offers.

The property has been determined by RHS to be 

inadequate for residential occupancy. The Quitclaim 

Deed by which the property will be conveyed will 

contain a covenant restricting the residential unit on 

the property from being used for residential 

occupancy until the dwelling is repaired, renovated, 

or razed. This restriction is imposed pursuant to 

section 510(e) of the Housing Act of 1949, as 

amended 42 U.S.C. 1480. The structure must be 

razed or reconstructed and a Certificate of 

Occupancy issued before the deed restriction can be 

removed.

For a bid package or further information, contact 

RHS at 123-4567 or visit our office at 1955 Main 

Street, Anytown.

=EQUAL HOUSING

OPPORTUNITY
HB-1-3550

Attachment 16-D 

Page 6 of 9

Example 2(B)

RHS

Investment Properties 

for Sale

1955 Lois Lane 114 Maple Street

Anytown, USA Anytown,USA

Minimum Price: $22,000 Minimum Price: $22,000

Financing Available

To Non program applicants:

5% down, 10 year term, 10.5% APR to 

nonoccupant/investors

2% down, 30 year term, 10.5% APR to 

owner/occupants.

ALL RATES AND TERMS ARE SUBJECT TO 

CHANGE WITHOUT NOTICE.

Note: The property located at 114 Maple Street 

contains a dwelling unit which RHS has deemed 

inadequate for residential occupancy. The Quitclaim 

Deed by which the property will be conveyed will 

contain a covenant restricting the residential unit on

the property from being used for residential 

occupancy until the dwelling is repaired, renovated, 

or razed. This restriction is imposed pursuant to 

section 510(e) of the Housing Act of 1949, as 

amended 42 U.S.C. 1480(e). Contact RHS or any 

realtor for a list of items which must be 

repaired/renovated.

Contact your local RHS Office at 

123-4567 or any real estate 

broker.

=EQUAL HOUSING 

OPPORTUNITY
HB-1-3550

Attachment 16-D

Page 7 of 9

(01-23-03) SPECIAL PN 

Revised (11-03-17) PN 505

Templates for developing Advertisements
HB-1-3550

Attachment 16-D 

Page 8 of 9

More Templates

Headings and logos for use withtemplates
HB-1-3550

Attachment 16-D

Page 9 of 9

= =

(01-23-03) SPECIAL PN 

Revised (11-03-17) PN 505

OPPORTUNITY

EQUAL HOUSING 

OPPORTUNITY EQUAL HOUSING 

OPPORTUNITY

OPPORTUNITY

EQUA

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L HOUSING 

OPPORTUNITY

OPPORTUNITY

Investment 

Properties 

for Sale

Financing 

Available

Investment Buy 

of the Month

Home

of the Week

Sealed Bid Sale Farm for Sale Attractive USDA 

Homes for Sale

Homes 

Priced to Sell Price Slashed!!! Financing Available on

Excellent Terms

Farm Property 

for Auction

All Rates and Terms 

Subject to Change 

without Notice

USDA Is An

Equal Opportunity

Lender

EQUA=L HOUSING

EQUA

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L HOUSING

EQUA

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L HOUSING