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Good Neighbor Next Door Link

Answers to many HUD questions

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Link to finding the Revitalization Areas

Q&A: Good Neighbor Next Door Sales

 

Question: What Is the Good Neighbor Next Door (GNND) Sales Program?

Answer: 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.

Question: Am I Eligible for the GNND Sales Program?

Answer: 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.

Question: How Much of a Discount Can I Get on a HUD Home?

Answer: You can get a 50 percent 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 down payment is only $100 and you may finance closing costs.

Question: What Kind of Mortgage Financing Do I Need?

Answer: You may use FHA, VA, or conventional mortgages, or cash. HUD requires you to sign a Second Mortgage and Note 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.

Question: 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.

Question: What Is an FHA Rehabilitation Mortgage and How Can It Help Me Buy a HUD Home?

Answer: 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!

Question: Can I Sell the GNND Home after 3-years and Keep the Profit?

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

Question: Do I Have to Use a Real Estate Broker or Agent to Buy a GNND Home?

Answer: Yes.

Question: Do I Have to Be a First Time Homebuyer to Take Advantage of the Program?

Answer: No. However, 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. For example, if you submit an offer to purchase a home on August 1, 2007, you may not have owned a home during the period from July 31, 2006.

Question: Where Are These Homes Located?

Answer: The HUD homes are located in designated Revitalization Areas. There are hundreds of Revitalization Areas located in the United States.

Question: Does HUD Provide a Home Warranty?

Answer: No. All GNND homes are sold "as is," without any kind of warranty.

Question: Can I Buy Multiple Unit Properties (E.g., Duplexes, Triplexes, Etc.) through the Officer Next Door Program?

Answer: No. You can only buy single unit homes, townhouses, and condominiums through the GNND Program.

Question: Do I Have to Pay Earnest Money or Other Deposits in Order to Submit a Contract for a GNND Home?

Answer: 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.

Question: Can I Bargain with HUD on the Price of a GNND Property?

Answer: No. You must offer the exact HUD list price when bidding on any GNND property. Then you get a 50 percent discount off of that list price.

Question: What if I Leave the employment, that made me eligible, for Any Reason, during the Mandatory 3-year Residency Period?

Answer: 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.

Question: Some Agencies Have Other Homebuying Programs. Can the GNND Program Work in Conjunction with These?

Answer: Yes, as long as you can meet all the GNND program rules while participating in these other programs.

Question: What Happens if a Participant Fails to Honor the 3-year Occupancy Requirement?

Answer: 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.

Question: How Does HUD Enforce the 3-year Residency Requirement?

Answer: 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.

 

About Good Neighbor Next Door

To make American communities stronger, the U.S. Department of Housing and Urban Development designed the Good Neighbor Next Door (GNND) programs to encourage firefighter, EMTs, police officers, and teachers to buy homes in low and moderate-income neighborhoods.  Law enforcement officers, pre-Kindergarten through 12th grade teachers and firefighters/emergency medical technicians can contribute to community revitalization while becoming homeowners through HUD's Good Neighbor Next Door Sales Program. HUD offers a substantial incentive in the form of a discount of 50% from the list price of the home. In return you must commit to live in the property for 36 months as your sole residence.

To be eligible, firefighters, EMTs, law enforcement officers, and teachers must:
  • Be employed full-time.
  • Cannot own any other residential real estate
  • Agree to make the homes their sole residence for three years following the purchase.
  • Work in the areas in which the homes are located.
The 50 percent discount will be applied at closing. 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. 



FIREFIGHTER/EMT/OFFICER/TEACHER ELIGIBILITY

A Law Enforcement Officer is defined as an individual who is:
  • employed full time by a Federal, State, County or municipal government;
  • sworn to uphold, and make arrests for violations of, Federal, State, county, or municipal law; and
  • in good standing with the department.
A Teacher is defined as an individual who is:
  • employed full time by a a public school, private school, or Federal, State, county or municipal educational agency;
  • in good standing;
  • and holds a current State-level certification, as a classroom teacher or administrator in grades K through 12. 
A Firefighter/EMT is defined as an individual who is:
  • employed full time as a firefighter/emergency responder or emergency medical services responder unit of the federal government, a state, a unit of general local government, or an Indian tribal government serving the area where the home is located.
  • in good standing;
Furthermore, the purchaser may not own residential property for 1 year prior to offer submission and neither may the purchaser's spouse.  The purchaser, and his or her spouse, may not have previously participated in the program. Only one spouse may purchase the property.



ELIGIBLE PROPERTIES

Only single-family homes, condos and townhouses are eligible for GNND purchases.  Multifamily units are not eligible.   The number of properties available is limited and the list of available properties changes weekly.  Eligible  homes located are listed exclusively for sales through the GNND Sales program for five days. Winning bids are randomly selected by computer.

If no preliminary interest is received during the 5-day lottery period, the property will be made available for sale to the general public via the customary HUD competitive bid basis and the option to receive the fifty percent (50%) discount is no longer available. The fifty percent (50%) discount is available only during the initial lottery period.

  • GNND program teacher participants must certify that they are "employed by an educational agency that serves the school district/jurisdiction in which the home they are purchasing is located."
  • All GNND program participants are required to own and use their property as their SOLE residence for at least three (3) years.
  • All GNND program participants are required to execute a second mortgage and note for the amount of the discount which HUD can call at a later date if the buyer fails to re-certify.
  • After three (3) years from the date of closing, the second mortgage lien will automatically be satisfied.
  • All GNND program participants can not currently own any residential real estate for one year prior to date of submitting an offer on the home being acquired through the program nor have previously purchased another home under the GNND program.
Failure to comply with any GNND requirement may result in the remaining balance of the Second Mortgage becoming immediately due and payable.


The Firefighter/ EMT/Officer/Teacher may pay cash or (1) obtain financing from a HUD approved lender or (2) secure conventional financing.  The down payment for GNND is $100.00 if FHA financing is used.  HUD does not pay a buyer's closing costs or real estate brokers fees on the purchase of property through the GNND program.   Buyers must sign an exclusive buyer's agency agreement and pay broker commission at closing in order to be represented by Terrilee Fitz at RealtyPath Platinum Real Estate .  Buyers should be advised that when purchasing a home via the competitive bid process, allowable closing costs and broker commission can be paid by HUD


For more information, please read the Frequently Asked Questions.  Be forewarned, there are very few properties available thru this program.  If you do not like the restrictions of the program and/or wish to have more control over your housing choices, there are may other properties available on which I can still get you a phenomenal deal and limit the out-of-pocket expenses associated with getting into a home.    Interested parties can contact me to further discuss options and compare costs of a regular HUD purchase vs a GNND purchase.


 

 

SALES CONTRACT and REQUIRED ADDENDA:

- Fillable Sales Contract Form 9548

- check the following Addenda:

o Inspection Addendum

o Owner Occupant Certification Form

o Radon Gas and Mold Notice and Release Agreement

o GNND Certification Form 9549-A (For Officer only)

o GNND Certification Form 9549-B (For Teacher only)

o GNND Certification Form 9549-C (For Fire Fighter/Emergency Responder only)

o GNND Certification Form 9549 (Personal information questionnaire and must be completed by all participants)

o GNND Certification Form 9549–E (Employer verification of participation employment. Must be completed by all participants)

o Land Use Restriction Addendum

    • Flood Zone Addendum
    • Methamphetamine Disclosure Form for seller (Minnesota and South Dakota only) - Please refer to your property on the property listing or bid results (if your bid has been awarded) for downloading.
    • Mortgage Pre-Qualification Letter from a lending institution, if the purchase is to be mortgaged, stating that an in-house credit check has been performed and the purchaser has been pre-qualified for a mortgage up to a specified mortgage amount.
    • Certification from a Financial Institution, if the purchase is cash, stating that funds are available on the day of closing.

Failure to comply with this (or any GNND) requirement may result in the remaining balance of the Second Mortgage becoming immediately due and payable.

 

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