HUD'S GOOD NEIGHBOR NEXT DOOR SALES PROGRAM
The Department of Housing and Urban Development (HUD) has several special programs that may be of interest to many buyers. These programs are designed to encourage homeownership and to assist buyers in obtaining financing. One such program is the Good Neighbor Next Door Sales Program.
The Good Neighbor Next Door sales program is a part of HUD's initiative to help communities and encourage homeownership. It is run by the National Servicing Center (NSC). This program is available to police officers, firefighters, emergency medical technicians and Pre-kindergarten through 12th grade teachers. The program offers an incredible incentive in the form of a 50% discount off the list price of qualifying properties. In return for this discount, a purchaser must live in the property for three years and it must be his only residence. The purchaser will be required to sign a second mortgage and note for the amount of the discount. No interest or payments will be due on the second as long as the purchaser lives in the property for the minimum three year period.
Eligible properties are listed exclusively through the Good Neighbor Next Door Sales Program and are listed for five days. The number of available properties is limited and the listings change weekly.
There are specific procedures that must be followed to place an offer on an eligible property. The requirement can be found on HUD's website. If more than one bid is placed on the same property, an offer will be selected by a random lottery process.
Each year, a purchaser under the Good Neighbor Next Door Sales Program must certify that he is living in the property. If the purchaser fails to file the annual certification in any of the first three years of ownership, an investigation will take place to determine whether the purchaser actually occupies the property. An investigator will visit the property and request that the purchaser sign the certification in his presence. If the investigator is unable to ascertain whether the purchaser actually occupies the property, the case will be turned over to the Inspector General for further investigation and possible prosecution.
If a purchaser is called to active military duty, he is exempted from the occupancy requirement for the duration of his deployment. However, he must notify the NSC of the deployment in order to avoid being penalized. Purchasers who are on active military duty are allowed to rent the property during the period of deployment.
If a purchaser under the Good Neighbor Next Door Sales Program wishes to refinance the first mortgage on the property HUD must approve the transaction. HUD will agree to the refinance under the following circumstances:
- If it is for the purpose of obtaining an FHA 203(k) rehabilitation loan;
- If is for the purpose of obtaining a lower interest rate or change in the term of the loan; or
- To prevent the purchaser from defaulting on the first mortgage.
At the end of the three year occupancy period, HUD will release the second mortgage as long as the purchaser has completed and returned all required annual certifications, is not currently under investigation by the Office of the Inspector General, and is in compliance with all other requirements of the Good Neighbor Next Door Sales Program.