Half Price Homes – Good Neighbor Next Door Program

GOOD NEIGHBOR NEXT DOOR (GNND) PROGRAMTHIS MAY BE THE BEST REAL ESTATE DEAL ON THE PLANET.The U.S. Department of Housing and Urban Development (HUD) allows Firefighters, Emergency Medical Technicians, Law Enforcement Officers, and Pre-K through 12th grade teachers the opportunity to participate in the Good Neighbor Next Door Program and buy a home for Half Price!!!

HOW THE PROGRAM WORKS

  • We check the GNND listings on the HUD web site and find a home that you are interested in buying.
  • We will establish a Buyers Representation Agreement identifying us as your real estate representative. A licensed real estate agent is required for all GNND transactions.
  • We submit your intent to buy that home for the price listed on the web site. If more than one person submits an intent to buy that home, HUD will select a buyer by random lottery.
  • If you are awarded the home, we will submit all of the necessary contracts and HUD will verify that you are an eligible buyer. (Buyer eligilibility requirements are below)
  • All GNND homes require a 1% earnest money check in the form of a cashiers check at the time of contract submission and will require a $100 down payment on the loan at closing.
  • Your mortgage company prepares the loan documents, does the underwriting of your loan, and coordinates the closing with HUD’s closing agent within 45 days.
  • At closing you will sign two mortgages. The primary mortgage will typically be for 15 years or 30 years and will be for half of the list price of the home. The “Silent Second” mortgage is for the other half of the list price of the home. HUD requires the purchaser to live in the home as their primary residence for three years after closing. The “Silent Second” is reduced by 1/36th each month that you live in the home as your primary residence. No interest or payments are required on the “Silent Second” mortgage provided that you fulfill the three year occupancy requirement.
  • At the end of the three year occupancy requirement you are free of all GNND program requirements and can do anything you would like to do with the home that is allowed by law or HOA restrictions if they happen to apply.


  • The number of properties available is limited and the list of available properties changes weekly.


ELIGIBILITY REQUIREMENTS

The U.S. Department of Housing and Urban Development (HUD) wants to make American communities stronger and to build a safer nation. The Good Neighbor Next Door (GNND) program helps make this goal a reality by encouraging law enforcement officers, pre-K through 12th grade teachers and firefighters/emergency medical technicians to become homeowners in revitalization areas.

WHO CAN PARTICIPATE?

LAW ENFORCEMENT

You may participate in the Good Neighbor Next Door program as a law enforcement officer if you are employed full-time by a law enforcement agency of the federal government, a state, a unit of general local government, or an Indian tribal government; and, in carrying out such full-time employment, you are sworn to uphold, and make arrests for violations of, federal, state, tribal, county, township, or municipal laws.

TEACHERS

You may participate in the Good Neighbor Next Door program as a Teacher if you are employed as a full-time teacher by a state-accredited public school or private school that provides direct services to students in grades pre-kindergarten through 12. In addition, the public or private school where you are employed as a teacher must serve students from the area where the home you are purchasing is located in the normal course of business.

FIREFIGHTER/EMERGENCY MEDICAL TECHNICIANS

You may participate in the Good Neighbor Next Door program as a Firefighter/Emergency Medical Technician if you are employed full-time as a firefighter or emergency medical technician by a fire department or emergency medical services responder unit of the federal government, a state, unit of general local government, or an Indian tribal government serving the area where the home is located.


FAQ’S

WHAT IS THE GOOD NEIGHBOR NEXT DOOR (GNND) SALES PROGRAM?

HUD wants to strengthen America’s communities. The Good Neighbor Next Door Program offers HUD owned single family (one-unit) homes to eligible participants at a 50% discount.

AM I ELIGIBLE FOR THE GNND SALES PROGRAM?

Law enforcement officers, teachers and firefighters/emergency medical technicians and who meet all other requirements of the program are eligible to purchase an available home.

HOW MUCH OF A DISCOUNT CAN I GET ON A HUD HOME?

You can get a 50% discount off the HUD appraised value. For example, if HUD lists a home at $100,000, you can buy it for $50,000 provided, you occupy the home as your personal residence for the required occupancy period. If you qualify for any FHA-insured mortgage program, your downpayment is only $100 and you may finance closing costs.

WHAT KIND OF MORTGAGE FINANCING DO I NEED?

You may use FHA, VA, or conventional mortgages, or cash. HUD requires you to sign a Silent Second Mortgage on the discounted amount (which is $50,000 in the example above). No interest or payments are required on this “silent second” mortgage if you live in the home for the entire 36 month occupancy period. 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.

WHAT IS THE OCCUPANCY PERIOD?

You must live in the home as your sole residence for a full 36 months. The purpose of the program is to strengthen communities by encouraging employed, professional law enforcement officers, teachers, and firefighters/emergency medical technicians to live in the community. 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. Your 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.

WHAT IS AN FHA REHABILITATION MORTGAGE AND HOW CAN IT HELP ME BUY A HUD HOME?

The FHA 203(k) mortgage program helps homebuyers buy a home and have enough money to rehabilitate or repair it. Repairs must cost more than $5,000. The cost of the repairs and the mortgage are combined into a single monthly payment. Consider FHA’s 203(b) program if needed repairs are under $5,000. FHA also has a new Streamlined 203(k) program which may be useful.

Discuss these financing options with your lender!

CAN I SELL THE GNND HOME AFTER 3-YEARS AND KEEP THE PROFIT?

Yes. After you live in the GNND home 3 years, you can sell the home and keep any equity and/or appreciation.

DO I HAVE TO USE A REAL ESTATE BROKER OR AGENT TO BUY A GNND HOME?

Yes, using a licensed real estate broker or agent is required. HUD does not however pay the real estate commissions on GNND homes that are typically paid by sellers. All real estate commissions are paid by the buyer but may be financed into the loan.

DO I HAVE TO BE A FIRST TIME HOMEBUYER TO TAKE ADVANTAGE OF THE PROGRAM?

No. However, you are required to not have owned any residential real property for one year prior to submitting an offer on the home. For example, if you submit an offer to purchase a home on August 1, 2007, you may not have owned a residential property during the period from July 31, 2006 to July 31, 2007.

DOES HUD PROVIDE A HOME WARRANTY?

No. All GNND homes are sold “as is,” without any kind of warranty. There are several third party home warranties that are available for the buyer to choose from and these may be financed into the loan.

DO I HAVE TO PAY EARNEST MONEY OR OTHER DEPOSITS IN ORDER TO SUBMIT A CONTRACT FOR A GNND HOME?

Yes. The amount of the earnest money deposit required is an amount equal to one percent of the list price, but no less than $500 and no more than $2,000. HUD considers all offers to be a commitment to purchase a home if you are awarded the sale. Therefore, please carefully consider your offer and be aware of HUD’s policy on earnest money as stated here:

If an offer is accepted, the earnest money deposit will be credited to the purchaser at closing. If the offer is rejected, the earnest money deposit will be returned. Earnest money deposits are subject to total forfeiture for failure of the participant to close a sale.


CAN I BARGAIN WITH HUD ON THE PRICE OF A GNND PROPERTY?

No. You must offer the exact HUD list price when bidding on any GNND property. When you go to closing, you get a 50% discount off of that list price.

WHAT IF I LEAVE THE EMPLOYMENT, THAT MADE ME ELIGIBLE, FOR ANY REASON, DURING THE MANDATORY 3-YEAR RESIDENCY PERIOD?

Nothing happens, but you must continue to live in the home for the full 36-month mandatory occupancy period. If you move out of the GNND home, you will have to repay HUD on a prorated schedule. In addition, you must certify that it is your good faith intention to remain employed as a law enforcement officer, teacher, or firefighter/emergency medical technician for one year beginning with your purchase. Do no attempt to participate in the program if you know in advance that you will not be employed as required for at least one year.

WHAT HAPPENS IF A PARTICIPANT FAILS TO HONOR THE 3-YEAR OCCUPANCY REQUIREMENT?

HUD can demand repayment of the discounted amount on a prorated basis. That means you would have to repay 1/36th of the discount you received for each month that you did not occupy the home. HUD also may initiate administrative sanctions including, but not limited to, barring the officer from participating in any HUD/FHA programs, as well as other federal programs. In any case of fraud or abuse, HUD will refer the case to HUD’s Office of the Inspector General for investigation and possible criminal prosecution. HUD may also notify the officer’s employing agency. Criminal prosecution and conviction for fraud and abuse concerning the GNND Program can result in a fine of up to $250,000 and/or two years in federal prison.

HOW DOES HUD ENFORCE THE 3-YEAR RESIDENCY REQUIREMENT?

The participant must certify he or she is living in the GNND home as a sole residence at the time of purchase and each year after that. HUD can conduct spot checks to make sure the GNND home is your sole residence at any time during the 3-year period. You also must sign a note and mortgage for the discount amount. HUD may foreclose this mortgage if you do not comply with the 36-month occupancy requirement.