Get A Home For A 50% Discount With The Good Neighbor Next Door (GNND) Program
What Is It?
The Good Neighbor Next Door Program offers HUD owned single family (one-unit) homes to eligible participants at a 50% discount. 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. Buyers of GNND homes must live in the home for the full 36-month mandatory occupancy period. If they move out of the GNND home before the 36 months, they will have to repay HUD on a prorated schedule. In addition, they must certify that it is their good faith intention to remain employed as a law enforcement officer, teacher or firefighter/emergency medical technician for one year beginning with the purchase.
Who Is Eligible?
Law Enforcement personnel may participate in the Good Neighbor Next Door program as a law enforcement officer if they 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, they are sworn to uphold, and make arrests for violations of, federal, state, tribal, county, township, or municipal laws. Typically this is going to be someone who holds a TCLEOSE license.
Teachers may participate in the Good Neighbor Next Door program as a Teacher if they 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 they are employed as a teacher must serve students from the area where the home they are purchasing is located in the normal course of business (i.e., a teacher employed by Garland ISD must purchase a home in Garland)
Firefighter/Emergency Medical Technicians
Firefighter/Emergency Medical Technicians may participate in the Good Neighbor Next Door program if they 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
How Does It Work?
The GNND lottery winner can get a 50 percent discount off the HUD appraised value. For example, if HUD lists a home at $100,000, they can buy it for $50,000 provided they occupy the home as their personal residence for the required occupancy period. If they qualify for any FHA-insured mortgage program, the downpayment is only $100 and they may finance closing costs and prepaids. No interest or payments are required on this "silent second" mortgage if they live in the home for the entire 36 month occupancy period. The buyer may be required to pay a pro-rata portion of the discount to HUD should they fail to fulfill the three year occupancy requirement. After they live in the GNND home three (3) years, they can sell the home and keep any equity and/or appreciation.
Buyers do not need to be a First-Time Home Buyer; however, they may not own any other residential real property at the time they submit their offer to purchase a GNND home and for one year previous to that date. For example, if they submit an offer to purchase a GNND home on August 1, 2014, they may not have owned a home during the period from July 31, 2013.
The selection of who gets a GNND bid is literally an “electronic draw from the hat”. Buyers must offer the exact HUD list price when bidding on any GNND property. If their bid is drawn in the electronic lottery, then they get a 50 percent discount off of that list price. However, it is very important to understand that the buyer’s commission, closing cost and prepaids will be rolled back into the note (if the buyer wants to be out of pocket nothing but their required $100). So in our example of $100,000, we would start with a base loan amount of $50,000 + realtor commission (based off the sales price) + closing costs + owners title policy + prepaids + a repair escrow (if applicable and the house is marked as a repair escrow) so they actually would end up having a loan amount of $60,000+ (but still a great deal!). It is important to note in our scenario that the soft 2nd lien would still be $50,000 because they get the house at 50% of the $100,000 (in our scenario) and then we are rolling on all the cost associated. The buyer does not have to roll in any cost and can pay all of it out of pocket if they wish.
Eligible GNND properties can be located http://www.hudhomestore.com/Home/Index.aspx. Select Texas as the State and drop down Buyer Type to Good Neighbor Next Door.
Buyers and Realtors can find details on the program on the following web page http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/reo/goodn/gnndabot. The GNND buyers can bid in lottery, exclusive, and extended phases, but can bid exclusively on insured single unit homes in revitalization areas in the lottery phase. Only homes that are designated by HUD to participate in the GNND lottery can qualify for this program (so to reiterate, not all HUD homes are eligible for the GNND program- only those preselected by HUD).