What is HUD’s Good Neighbor Next Door (GNND) program?

By now you’ve probably heard snippets here and there about HUD’s Good Neighbor Next Door (GNND) program on the news, radio, newspaper, or Realtors like me who do monthly HUD Sales Training and Buyer’s Outreach events to better educate agents and buyers on the great things that HUD Homes have to offer. Here’s a little breakdown of the GNND program, take a look and call me if you or someone you know meets the requirements and is looking to purchase a home.
About Good Neighbor Next Door

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.

How the Program Works

Eligible Single Family homes located in revitalization areas are listed exclusively for sales through the Good Neighbor Next Door Sales program. Properties are available for purchase through the program for five days.

How to Participate in Good Neighbor Next Door

Check the listings for your state. Follow the instructions to submit your interest in purchasing a specific home. If more than one person submits on a single home a selection will be made by random lottery. You must meet the requirements for a law enforcement officer, teacher, firefighter or emergency medical technician and comply with HUD’s regulations for the program.

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.

The number of properties available is limited and the list of available properties changes weekly. Contact me for an updated list of these homes.

In a Nutshell:

PURPOSE To improve the quality of life in distressed urban communities.
OVERVIEW
  • Enables a full-time law enforcement officer, teacher, or firefighter/emergency medical technician to purchase a specifically designated HUD-acquired home
  • At a 50 percent discount from the list price;
  • Property must be located in a revitalization area
  • Successful bidder is selected by random lottery
  • Offers must be submitted through real estate brokers
PURCHASER QUALIFICATIONS
  • Law enforcement officer
  • Teacher
  • Firefighter/emergency medical technician
  • Good faith intent to remain in employment status for one year
  • Earnest money
  • Fulfill owner occupancy period
  • No residential real property ownership for 1 year preceding offer submission date by either spouse
  • No prior participation in program by either spouse.
  • Only one spouse may purchase
LAW ENFORCEMENT OFFICER
  • Employed full-time by a law enforcement agency of the federal government, a state, unit of general local government, or an Indian tribal government; and
  • In carrying out such full-time employment, the person is sworn to uphold, and make arrests for violations of, federal, state, tribal, county, township, or municipal laws.
TEACHERS
  • 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; and
  • The public or private school where the person is employed as a teacher serves students from the area where the home is located in the normal course of business.
FIREFIGHTER/ EMERGENCY MEDICAL TECHNICIAN
  • 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. 
EARNEST MONEY
  • Required
  • 1% of list price, but no less than $500 and no more than $2,000. 
OWNER-OCCUPANCY TERM
  • 36 months
  • Starts on 30, 90 or 180 days from closing according to property condition
INTERRUPTION OF O-O PERIOD
  • Permitted if the interruption is necessary to prevent hardship as determined by HUD
  • Requires request in writing received 30 days or more from desired vacation date
  • Agrees to resume occupancy
SPECIAL FHA FINANCING INCENTIVES
  • Finance all reasonable and customary closing costs
  • Downpayment of $100
FINANCING LIMITATIONS
  • Conventional financing may not exceed discounted sales price
  • FHA financing limited to discounted sales price plus closing costs plus rehab costs if 203(b) or 203(k) used.
SUBORDINATE MORTGAGE
  • Required
  • Must equal 50% of the list price
  • 36 months term
  • Self-amortizes monthly
  • Pro rata balance due for non-compliance computed from month of violation
REFINANCING
  • Permitted with restrictions
  • 95% LTV including balance of subordinate mortgage
REFINANCING PURPOSES
  • Will result in a lower annual percentage rate (APR) on the first mortgage;
  • Will be undertaken pursuant to HUD’s Section 203(k) Rehabilitation Loan Insurance Program in order to rehabilitate or repair the home; or
  • Is necessary to prevent the law enforcement officer, teacher, or firefighter/emergency medical technician from defaulting on the first mortgage.
MULTI-UNIT PROPERTIES
  • No
POST-PURCHASE OBLIGATIONS
  • Continue to own, and live in as his/her sole residence, the home purchased through the GNND Sales Program; and
  • Certify initially and once annually thereafter during and at the conclusion of the owner-occupancy term that s/he was at all times fully in compliance with paragraph (a) of this section.
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