HUD is an acronym standing for Housing and Urban Development, a cabinet of the United States, charged with ensuring smooth policy for housing and city development. Since the mid-1970s, its focus has shifted primarily to housing, leaving urban planning more in the hands of individual cities.
One of the main functions of HUD, and certainly that with which most people interact, is its role as a lending facilitator. HUD helps people of low- and mid-level incomes acquire loans to purchase housing. HUD itself is not a lending institution, but it approves lenders and supports them materially.
HUD is also loosely connected to the the Federal Home Loan Mortgage Corporation (Freddie Mac) and the Federal National Mortgage Association (Fannie Mae), both of which deal with mortgages in the United States. The Federal Housing Administration (FHA) falls more closely under HUD, helping to guarantee mortgages to low-income homeowners.
There are many reasons why a condo may not be HUD approved, and therefore not eligible for an FHA- insured loan. (Read HUD's Valuation FAQ's here: http://www.hud.gov/offices/hsg/sfh/faqs/atl1val.cfm
) The end result would be that if the condo cannot get approved, you would not be eligible to use the lower down payment, FHA loan, forcing you to get a conventional, conforming loan.
In the past, lenders could assist with "spot approvals" of individual purchases in buildings not previously on the FHA lender approved list. That option is now off the table, due to overall tightening of FHA underwriting gudelines. (Please see my post about new FHA guidelines here: http://debbiebremner.posterous.com/new-fha-policies-higher-p
The tighter guidelines are ultimately designed to help buyers find and qualify for better units in better buildings, and truly afford what they qualify for.
In terms of repairs and safety, HUD guidelines are very consumer-centric, and focused on the homebuyer's protection. If you must buy without an FHA loan, you can accomplish the same thing for yourself, by diligently investigating the condo association, reading the ccr's, bylaws, and minutes; and with respect to the physical unit, hiring the best inspector you can get. INSIST that the property be in excellent condition, paying strict attention to the "health and safety" issues in the unit.
Best of luck,
Certified Short Sale Professional
Certified Home Retention Specialist
Blogging at: http://TheBremnerGroup.com/blog