Half-Priced Homes from HUD: What to Know
Spread the word to your teacher, police officer, firefighter, and emergency medical clients: There’s a program that they can use to buy homes at half the cost.
The Department of Housing and Urban Development’s (HUD) sponsored-housing program called Good Neighbor Next Door is a little publicized program that allows police officers, teachers, firefighters, and emergency medical technicians to purchase some homes at half the purchase price. The program discounts of HUD-owned foreclosure properties in areas that are earmarked for revitalization.
The home prices of the HUD properties are cut in half, but buyers must be able to qualify for a loan equal to the full price of the property. To be eligible, the buyers must agree to live in the home for at least three years and the buyers must not have owned any other residential property within the previous year.
HUD also requires purchasers to sign a “silent second” mortgage for the amount that the property was discounted. The buyers won’t pay on the interest or payment on that second mortgage as long as they live in the property for the three years. At that point then, the second mortgage note is disregarded, says Kevin Kelly, a listing broker for HUD homes in the Buffalo, N.Y., area.
Buyers can search for eligible properties in their local area at hudhomesstore.com.
If multiple buyers come forward on a property, HUD will select the winner at random in a lottery, Kelly says. If no buyers come forward for a property, the home is then offered at full price to any buyer, as long as they agree to become an owner-occupant.
The program is a “phenomenal opportunity” for first-time buyers, says Warren Foley, a real estate professional who specializes in HUD listings in the St. Petersburg, Fla. area.
“It’s never been a huge program,” since it is limited to certain areas, Brian Sullivan, a HUD spokesman, told The New York Times. Also, the numbers of listings have dwindled in recent years as HUD’s stock of foreclosure properties has declined, he notes.
Source: “HUD Homes at Half Price,” The New York Times (Nov. 27, 2015)
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