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>>> Police, Teachers, Firefighters & EMT’s Only <<<GNNP homes 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)
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
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 downpayment is only $100 and you may finance
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
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?
Question: Do I Have to Be a First Time Homebuyer to Take Advantage of the Program?
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?
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?
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
Question: 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. 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?
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?
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?
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.