What is the CWCOT program?
The Federal Housing Administration’s (FHA) Claims Without Conveyance of Title (CWCOT) program is intended to find better options to reduce the inventory of properties held by the U.S. Department of Housing and Urban Development (HUD). The goal is to allow buyers to purchase homes through traditional public foreclosure sales and also through online auction marketplaces. HUD requires online marketing of all properties as part of the CWCOT program to broaden the purchase opportunity to a larger number of buyers.
What are the benefits and opportunities with the CWCOT program?
The benefits of this program for buyers is the ability to acquire properties from HUD in an open marketplace for prices based on discounted market values. HUD performs appraisals on all CWCOT properties, then allows further discounts to be applied.
These properties are typically offered as cash-only purchases at the traditional foreclosure public auction or the online auction. Often the current condition and occupancy of the properties are unknown, so access to the properties is prohibited prior to closing. Buyers are encouraged to perform due diligence on all properties so they are prepared for the auction process.
Homes purchased through the CWCOT program can be transferred quickly through a quitclaim deed; however, obtaining title insurance is recommended to protect the buyer from unforeseen liens or other items on a title that would transfer with the purchase of the property. As part of the online auction, these homes are offered with no buyer’s premium which is an opportunity for buyers to save money on the purchase. Most CWCOT properties are not on the Multiple Listing Service (MLS) so there is less competition.