GOOD NEIGHBOR NEXT DOOR PROGRAM - 50% OFF HOMES FOR OFFICERS, TEACHERS, FIREFIGHTERS, & EMT'S
The Good
Neighbor Next
Door Program

"Frequently Asked Questions"
 
 



What Are the Benefits for the Participant?
The Lottery winner may purchase the property at a 50 percent discount from the current "AS IS" APPRAISED VALUE which is the LIST PRICE. For example, if the home has a LIST PRICE of $150,000, a participant can buy it for $75,000. You can also apply for an FHA-insured mortgage with a down payment of only $100 and you may finance all closing costs, repairs, improvements, appliances and all acquisition expenses. You must live in the home for three years, but after that you can sell the home and keep all the profit.  If the home you want to purchase needs updating or repairs, you may use FHA's 203(k) or the new 203(k) Streamline Mortgage program. This mortgage option allows you to finance both the purchase of the home and any needed repairs and/or updates you want to make to the home. You have the benefit of one loan for both costs and one monthly payment. It is a home improvement loan and property acquisition loan combined in one.  
 
 Who can participate?
 All participants must be employed full-time by a federal, state, county, or municipal government; Indian tribal government or division of local government, public or private college, university or school. Current homeowners CAN NOT participate and you can not have owned any other residential real estate for 1 year prior to lottery submission.  
Law Enforcement Officers
You must be sworn to uphold and make arrests for violations of federal, state, county, or municipal law. Your employer must certify that you are a full-time officer with unlimited general powers of arrest. Law Enforcement officers are restricted to the boundaries of their authority to make arrest. Municipal, county, and state agencies usually have power of arrest throughout the entire state. Therefore, they are allowed to be entered into any property in the state. Federal Law Enforcement officers are the only area UNRESTRICTED participants in the GNND program. Federal Bureau of Prisons personnel are no longer eligible.  
Teachers
You must be state certified or accredited and employed full time by a public or private school grades Pre K-12th grade. You are restricted to homes that are located in the area or School District serviced by your employer. 
Firefighters & Emergency Medical Technicians
You must be employed full time by a unit of a federal, state, or general local government, or an Indian tribal government. You are restricted to homes that are located in your employer's service area.

 How does a house become a HUD Home and qualify for the Good Neighbor Next Door (GNND) program?
The Federal Housing Administration (FHA), which is a part of the Department of Housing and Urban Development (HUD), provides federal mortgage insurance which ensures that mortgage lenders will be reimbursed in the event homebuyers default on the mortgage. When a lender is forced to foreclose on an FHA-insured single family home, townhome, or condominium because the owner can no longer make payments, the Lender can file a claim with FHA for the balance due on the mortgage and convey title of the property to HUD. If that home is in a geographical area coded as a revitalization area, then it is placed on the GNND program. 
 
 I saw a great house with a HUD sign in the window. Why is the home not on your list?
Either the home has already been sold, in the make ready process, or it is not in a revitalization area. Only homes available for sale and on the GNND program are posted on this web site.  

Where do I obtain financing for the home? 
You can use any Lender of you choice. However, to take advantage of the $100 down payment program, your Lender must handle FHA 203B and/or 203K loans. Please keep in mind that it is almost impossible to combine other assistance programs with the GNND program. It is also not possible to use a VA loan or USDA loan on most properties. 
 
What happens if no one enters the lottery or the winner can not close on the home they won?
If no one enters the Lottery for a home during the exclusive 5 day GNND reserve listing period, then the home is lost from the program and will be marketed to the general public and investors at full price. If the Lottery winner can not close for any reason, the next lottery participant will be contacted and offered the opportunity to purchase the home.    
 
What does IN, IE, and UI mean?
HUD homes are listed three ways "IN" Insurable, "IE" Insured with Escrow, and "UI" Uninsurable. This has nothing to do with getting Homeowners Insurance and everything to do with whether the property qualifies or meets FHA Minimum Property Standards (MPS). In order to obtain an FHA Insured Loan, FHA requires that a home meet certain requirements and standards. "IN" Insurable means the property in its present condition meets all FHA MPS to qualify for an FHA 203B loan without any repairs. "IE" Insured with Escrow means that there are some deficiencies that do not meet the MPS, but the home does qualify for an FHA 203B with Repair Escrow loan. These deficiencies or MPS violations are things like broken water heater, roof repairs, peeling paint, flooring and/or drywall etc... It has been estimated by the Appraiser of the property that all the repairs would cost $5,000 or less to meet MPS. The Repair Escrow amount is not paid by HUD and is added to the Buyers total loan amount. The Buyer has 30 days to make the repairs and then after an inspection your Lender releases the money to you. "UI" Uninsurable means that it has been estimated that repairs needed to bring the property back up to MPS would cost more than $5000. This property does not qualify for FHA 203B financing, but as with most HUD properties it does qualify for FHA 203K financing or 203(k) streamline financing. FHA 203K Financing is a property acquisition loan and home improvement loan all rolled into one. Some HUD homes can not qualify for any type of FHA financing but they are very rare. These properties can only be purchased with convential financing methods or cash.   
 
 Should I get Prequalified for a mortgage?
Yes! Get started on the mortgage loan process through a FHA Lender who has experience with the FHA 203K and 203B loan products as soon as possible. You may still enter the Lottery without being prequalified, but a prequalification letter from a Lender is required with your purchase contract.   
 
When does the Lottery drawing take place and when will I find out if I won?
The lottery drawing takes place five days after the house is listed. All entries must be received before midnight the fifth day. All Winners are notified by noon the same day of the lottery drawing unless Federal holiday. If the initial winner does not qualify, then the option to buy the house goes to the backup entrant. Backup winners may be notified weeks or even months after the lottery.  
 
 Should I look at every home that becomes available before I enter the lottery?
Please try to drive by the home or homes that you may have an interest in and look over the area. Remember these homes are FORECLOSURES and are often neglected for several months prior to HUD taking ownership. HUD sells property "as is" and does not fix them up for curb appeal. Make sure the AREA is right for you and the repair escrow or 203K loan will take care of the house fix up expenses.   
 
What if I win a home and then change my mind about purchasing it?
If you change you mind about purchasing a home you were awarded, you will not be penalized in any way if you decide to not purchase the home prior to submitting all of your paperwork. Then the property will be awarded to the next person in the Lottery.If you decide not to purchase the home after your contract has been accepted by HUD, then you will loose your earnest money (1% of the appraised value). HOWEVER, should the Buyer become unable to get financing, illness, job loss, or death of immediate family member, or for other good cause, then the earnest money will be refunded to the Buyer. Any money spent on inspections, surveys, structural engineer reports or utility connections will not be refunded.    
 
What is the maximum amount that can be financed for repairs on the FHA 203K loan?
You can borrow up to 110% of the total appraised value for acquisition of the home, repairs, remodeling, upgrades, and appliances with the regular 203(k). And up to $35,000 on the streamline 203(k).    
 
Who makes repairs and improvements to the homes?
If repairs and improvements total $35,000 or more, any FHA approved licensed contractor can make repairs and do improvements to your home.   
 
What are my chances of getting a home?
The chances of winning are directly proportional to the number of entries.   
 
How long does it take to close on a home?
Homes with an "IN" or "IE" designation usually close in 45 days after HUD signs the contracts. Homes designated "UI" usually close 60 days after HUD signs the contracts.   
 
If I am moving to another state when can I start entering the Lottery for homes in my new state?
You can start entering the Lottery in other states as soon as your employment can be verified and you are certified in your new state. Federal Law Enforcement Officers can enter any Lottery in any state at any time.  
 
 What if I own a home?
Current homeowners can no longer participate and you can not have owned any real property for 1 year prior to lottery submission. Vacant land, vacant lots, and any trailers that are taxed as personal property are not considered residential real property in most cases.  
 
 Am I restricted to bidding on properties in any particular area?
Yes! School Teachers are restricted to homes that are located in the area or School District serviced by their employer. Fire Fighters and EMT's are restricted to homes that are located within the entire servicing area of their employer and adjoining areas in which mutual aid agreements exists. Law Enforcement officers are restricted to the boundaries of their authority to make arrest. Municipal, County, and State Agencies usually have power of arrest throughout the entire state. Therefore, they are allowed to be entered into any property in the State. Federal Law Enforcement Officers are the only UNRESTRICTED participants in the GNND program. Federal Bureau of Prisons guards are no longer eligible.    
 
How much earnest money do I have to put down?
The program does require 1% of HUD's listed price to be presented at time of contract submission to HUD in the form of a cashier's check payable to the US Dept. of HUD.    
 
How does the $100 move in work? What about Closing Cost?
If you choose to take advantage of the FHA $100 move in option, then all normal Closing Cost for your area, repairs, commissions and fees associated the acquisition of the property are added to your total mortgage. You can choose to pay these expenses out of pocket if you like.   
 
There are several homes I want. Can I enter the Lottery on more than one property?
Yes! HUD does not allow you to choose homes if you are the winner of more than one house. You will be awarded the first property won and any subsequent wins will be passed on to the next entrant. The order in which Lotteries are conducted is random.  
 
 What continuing obligations apply to me if I purchase a home Program?
To remain a participant in the Program you must, for the entire duration of the owner-occupancy term: (a) Continue to own, and live in as your sole residence, the home you purchased through the Good Neighbor Next Door Sales Program; (b) Not own any other residential real property other than the home you purchased through the Good Neighbor Next Door Sales Program; and (c) Certify initially and once annually that paragraphs (a) and (b) of this section continue to be true.   
 
May I purchase a multi-unit property if I plan to live in one of the units as my sole residence?
No, only single-unit properties are eligible for the Officer Next Door Sales Program.   
 
What happens if I get called to active military duty?
Participants that are called to active military duty are provided clemency in regards to the owner occupancy requirements of the program for the timeframe that they are in active duty. Participants on active military duty are not required to occupy the property and are allowed to rent the property (only while on active duty) if necessary to minimize potential vandalism.   
 
Can I Sell the Good Neighbor Next Door Home after 3-years and Keep the Profit?
After you live in the GNND home 3 years, you can sell the home and keep all the equity and appreciation. 
 
 Can I Bargain with HUD on the Price of a Property?
Everyone offers the exact same HUD list price on any GNND property. Then Lottery winners get a 50 percent discount off of that list price.  
 
 What happens if I fail to honor the 3-year residency requirement?
HUD can demand re-payment of the discounted amount on a prorated basis. That means you would have to re-pay to HUD base on a percentage of the 36 months(3 years) you owned and lived in the home. If you received a $50,000 discount on a $100,000 home and sold the home after 18 months(One and a half years), then HUD could take $25,000(half the discount) from the proceeds of the sale. At the end of the third year there are no restrictions or penalties on the sale of the property.  
 
 I have a foreclosure on my credit. Can I still participate in the program?
Yes, but FHA financing will not be available until three years after the foreclosure. Privite investors or family members will often lend money on these properties because of little risk and security of investment. If you have the funds available, then you can pay cash and not finance anything.    
 
How long do I have to live in the GNND home?
You must live in your GNND home for 3 years to sell it with out a penalty.   
 
During the 3 year occupancy term can I rent out my GNND home and live somewhere else?
Only If you are called up for Military ACTIVE DUTY and deployed, then you may rent out or lease your GNND home after approval from HUD.    
 
Why is my Social Security number required?
This is the only way to make sure every participant enters the lottery only one time on any given home and that they have NOT previously purchased a GNND home.   
 
 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. 
 
 Does HUD Provide a Home Warranty?
No. All GNND homes are sold "as is," without any kind of warranty.  
 
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.  
 
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. 
 
 Some Agencies Have Other Homebuying Programs. Can the GNND Program Work in Conjunction with These? 
Yes, as long as you can meet all the GNND program rules while participating in these other programs.
 
  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.


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