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Not quite the free ride as it appears.

(1) Although they don't have a down payment they still have closing costs. Appraisal, Title insurance, Homeowners insurance, closing fees, title fees, recording fees, prorated property taxes and tax/insurance escrows.

(2) This is better than the the "$200 million American Dream Down payment Act -- that provides a maximum down payment assistance GRANT of either $10,000 or 6 percent of the purchase price of the home, whichever is greater, to qualified home buyers" because the buyer pays a mortgage plus insurance premium and instead of a $100,000 mortgage minus the $10,000 or 6% GIFT, they repay on $100,000 (That's interest AND the mortgage insurance premium @2.25%)

(3) As to HUD auctions, from what I've seen (in my area) the buyer does not get a very good "deal" for a number of reasons.

And for all of you rental owners, you have my sympathy because you are BIG BAD BUSINESS PEOPLE and the deck is stacked against you.

Oh and I forgot to mention that at one time at least, the MIP (mortgage insurance premium) which insures about the top 20% of the loan amount, actually turned a profit.

Yes you heard it here folks, a government program that was actually self sustaining. (don't know if it still is though)