The most common type of government foreclosures are those that have been repossessed after their owners defaulted on their loan, which was backed by the government.

Other kinds of government foreclosures include homes that have been seized in the course of criminal investigation or due to unpaid taxes. The lead government agency overseeing housing in the country is the Housing and Urban Development. They also oversee the biggest number of government foreclosed homes.

The government foreclosures of the HUD primarily come from homes that have been purchased through Freddie Mac and Fannie Mae mortgage guarantees. These two entities operate on the mortgage markets to ensure that there is enough funding for mortgage providers to continue offering loans to Americans dreaming of becoming homeowners, but to not have the means to own property.

Eligibility for Government Foreclosures

Most government foreclosed properties are being offered only to a particular set of buyers. These homes target buyers with a lower income than the regular home buyer. The government also requires that the buyers take up residence in the foreclosed home they are buying. Qualifying for a government-backed home loan would require borrowers to present a set of documents to indicate that they have a steady flow of income and that they are able to make regular payments on the loan for a long period of time.

Government foreclosed homes are also sold 'as is', and so, buyers would need to have enough funds to cover the repair work as well as all the other expenses that go with buying a pre-owned property. If you have qualified to buy a foreclosure from the government, you will still need to commission a professional home inspector to look over the property and assess the cost of repairs.

Another thing to look into is the title situation, as you would not want to be saddled with hidden taxes or a second and third mortgage on the home. Buyers should also be aware that in government foreclosures, there is a waiting time for former owners to redeem their property. So, you may have won the auction, but the former owner still has the right to regain the property once they are able to recover financially. But even with all the potential problems and risks, these homes are still the cheapest by far and many people have successfully acquired them.