Thats not exactly the way the HUD properties work. I am listing agent for HUD homes. If the buyer is getting a 203b loan, and the lender will agree to do an escrow (nobody here will do it), then if the home is "insurable with repair escrow",the buyer has to borrow the repair funds and add it on the loan. HUD will not repair the home. In seven years, I have never seen one of these work.
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Comments made are my opinion, and not intended to be legal advice of any kind.