Article Written by Kyle Clark 9 News
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DENVER – The sole contractor maintaining and marketing HUD-owned homes in Colorado and several other states claimed the government wasn’t paying its bills. So the company shut down all pending and future sales.
More than 400 homes in Colorado are being sold by HUD.
The freeze, impacting buyers and real estate agents in states including Colorado, Wyoming, Utah and Montana, was resolved Wednesday afternoon when the government provided the additional funding demanded.
The company, Michaelson Connor & Boul (MCB), posted a notice on its website Monday saying, "Until such time as HUD is provided with additional appropriated funds for this contract, no further work will be performed."
When a homeowner
with FHA loan defaults, HUD takes possession of the home. MCB holds a contract to manage the property and coordinate with potential buyers.
The shut down meant that buyers with scheduled closings faced delays and potential buyers were unable to place bids on HUD-owned homes.
"My clients have been just sitting back and waiting," Charles Roberts, a Realtor with Your Castle Real Estate, said.
"There are a whole lot of people who are caught in a bind," Roberts said. "I’ve got to believe it’s unprecedented."
Other Realtors expressed disbelief that HUD would allow time to pass with willing buyers waiting in the wings.
"It’s kind of foolish to turn down money that could be coming into HUD," Rick Erickson, a broker with Erickson Sellers in Arvada, said.
"The houses are costing them money every day they have them. There’s a chance of vandalism so there is risk and liability," Erickson said.
Realtors reported getting little guidance during the sales blackout from both HUD and MCB.
Chris George, a Realtor with Your Castle Real Estate, cautioned patience.
"People have a lot of financing that’s depending on these under-contract listings so they have to scramble to make sure their lender knows to be prepared for a bit of a wait," George said.
Despite claims to the contrary, HUD officials told 9Wants to Know on Wednesday the shutdown lasted only 10 hours and delayed only two closings.
Regional HUD administrator Rick Garcia says MCB told HUD it believed it was operating, and ceasing to operate, based on their contract.
"They made the decision that they didn’t believe there was going to be enough dollars at that time for them to continue to operate," Garcia said.
Garcia says any questions about possible breach of contract needed to be referred to HUD’s legal department but acknowledged the issue could impact any future contract applied for by MCB.
"I certainly feel that we should be as quick and diligent in dealing with the public as possible and that could be a factor in negotiating a future contract with this company," Garcia said.
Realtors said they were shocked and surprised that the system malfunctioned so badly.
"It sounded like a joke," Roberts said. "It’s unfair to say the government bungles everything. That’s just not fair. In this case, though, maybe it’s fair."
HUD said it will waive extension fees for impacted buyers and is offering help at 1-800-225-5342.
If you have a news tip for 9Wants to Know investigator Kyle Clark, e-mail him at kyle.clark@9news.com.
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Steve Melnick
Realty World Colorado Homes
4 W. Dry Creek Cir Suite 260
Littleton, Co 80120
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steve.melnick@realtyworldcoloradohomes.com
www.realtyworldcoloradohomes.com
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