The Real Story…
News and commentary about the real estate market and related topics.
Dave Parrish, ABR®, CSP, GRI, ePRO®,REALTOR ®, RE/MAX MarketPlace
The opinions expressed here are my own and don’t necessarily represent those of RE/MAX International.
Good Neighbor Next Door…
As I mentioned last week, one of the exceptional opportunities afforded by HUD properties is the special incentive to certain purchasers through its Good Neighbor Next Door Program… Buying a home through HUD’s Good Neighbor Next Door initiative is designed to encourage renewal of revitalization areas by providing an opportunity for law enforcement officers, firefighters, emergency medical technicians and teachers to purchase homes in these communities. HUD provides a substantial incentive in the form of a 50% discount off the list price of eligible properties.
Who can participate?
All participants must be employed full-time by a federal, state, county, municipal government, Indian tribal government, division of local government, or public/private school. Current homeowners CAN NOT participate and neither you nor your spouse could not have owned any other residential real estate for 1 year prior to lottery submission.
Law Enforcement Officers
You must be sworn to uphold and make arrests for violations of federal, state, county, or municipal law. Your employer must certify that you are a full-time officer with unlimited general powers of arrest. Law Enforcement officers are restricted to the boundaries of their authority to make arrest. Municipal, county, and state agencies usually have power of arrest throughout the entire state. Therefore, they are allowed to be entered into any property in the state. Federal Law Enforcement officers are the only area UNRESTRICTED participants in the GNND program.
Teachers
You must be state certified or accredited and employed full time by a public or private school grades Pre K-12th grade. You are restricted to homes that are located in the area or School District serviced by your employer.
Firefighters & Emergency Medical Technicians
You must be employed full time by a unit of a federal, state, or general local government, or an Indian tribal government. You are restricted to homes that are located in your employer’s service area.
What Are the Benefits for the Participant?
The Lottery winner may purchase the property at a 50 percent discount from the current “AS IS” APPRAISED VALUE, which is the LIST PRICE. For example, if the home has a LIST PRICE of $150,000, a participant can buy it for $75,000. You can also apply for an FHA-insured mortgage with a down payment of only $100 and you may finance all closing costs, repairs, improvements, appliances and all acquisition expenses. You must live in the home for three years, but after that you can sell the home and keep all the profit.
If the home you want to purchase needs updating or repairs, you may use FHA’s 203(K) or the new 203(K) Streamline Mortgage program. This mortgage option allows you to finance both the purchase of the home and any needed repairs and/or updates you want to make to the home. You have the benefit of one loan for both costs and one monthly payment. It is a home improvement loan and property acquisition loan combined in one.
HUD requires that you sign a second mortgage and note for the discount amount. No interest or payments are required on this “silent second” provided that you fulfill the three-year occupancy requirement. You may be required to pay a pro-rata portion of the discount to HUD should you fail to fulfill the three year occupancy requirement.
You may not own any other residential real property at the time you submit your offer to purchase a home and for one year previous to that date. You must live in the home as your sole residence for a full 36 months. You will have 30, 90 or 180 days to move into the home you purchase, depending on HUD’s determination of the condition of the home and the level of repairs that may be required, if any. The 30th, 90th or 180th day is the start date for the occupancy period. You are released from all obligations under this program at the end of the 36th month following the start date. HUD views the occupancy obligation seriously and vigorously pursues violators to the fullest extent of the law.
All-in-all very reasonable restrictions for a program offering such a unique equity opportunity to those who serve our communities. If you are a member of one of the qualifying occupations, this is an opportunity that deserves your attention.
For a list of HUD Homes visit: http://hudhomestore.com/HUDHome/GNND.aspx and contact a qualified real estate agent to see the property and to assist you with submitting your offer.
May the market be with you.
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