Buy A House For 50 Cents On The Dollar
- Image by akeg via Flickr
This opportunity doesn’t occur everyday. Certain individuals can buy a house at half the list price. For example, if the house is listed for $300,000 you can buy it for $150,000. It’s a great deal.
One of the many programs designed to revitalize communities is HUD’s Good Neighbor Next Door. Law enforcement officers, pre-Kindergarten to grade 12 teachers, firefighters, and emergency medical technicians, can purchase a HUD house and get a substantial discount of 50% off the list price.
The basic features of the program are as follows: The property must be located in a revitalization area. The property must be listed exclusively through the Good Neighbor Next Door program and will be available exclusively for five days. If more than one person submits an offer on the same house, there will be a random draw. All the purchaser need is as little as $500 for the downpayment, but no more than $2,000.
The homeowner can sell after 3 years and keep the profit if there is any. The contract is not violated when a purchaser leaves his or her employment, as long as the homeowner remains in the house for 3 years.
The buyer does not have to be a first time home buyer. However, he must not have owned a house one year prior to the purchase. HUD requires the homeowner to sign a second mortgage for the discounted amount. This is referred to as a silent second. There is no interest, and no payment on the second mortgage as long as the homeowner keeps his or her side of the bargain. If the homeowner moves out of the house before the contract term of 3 years, the silent second mortgage has to be paid off on a prorated basis. For example, if he stays for 18 months, he will be required to repay 50% of the second mortgage. In this case, if the house was listed for $200,000, the selling price to the homeowner was $100,000. The prorated amount of the second will then be $50,000.
There is an Annual Certification. When the homeowners purchased the house under the Good Neighbor Next Door program, they agreed to live in the house for three years, as their principle residence. Homeowners are required to sign a certification every year. The annual certification is mailed to the homeowners. They sign, date and return the form. If they do not return the letter, a second letter is mailed. Failure to return the annual certification letter will result in an investigation. An investigator will make a personal visit to the house. If the investigator suspects fraud, the file will be turned over to the Inspector General for further proof of wrongdoings and possible prosecution. Falsifying information is a felony. Penalties are substantial if a homeowner is found guilty. The fine can s up to $250,000, in addition, the guilty party can expect to spend two years in a federal prison.
The program allows for Military Duty. There is clemency for homeowners who are called to military duty. They can rent the house while they are away. They have to provide proof of their military service to the mortgage servicer.
Economic benefits are bountiful. The Good Neighbor Next Door program brings employed professionals into low to moderate income communities. It helps reduce some of the mounting housing inventory and brings economic resurgence to the community.
The borrower is release from the mortgage obligation at the end of the three-year contract. The HUD’s silent second mortgage will be released if all of the condition are met. These terms and conditions include: the homeowner has completed, signed and returned all annual certifications, the homeowner is not under investigation by the office of the Inspector General, and the homeowner is in full compliance with all Good Neighbor Next Door regulations. Releases are mailed to the county office thirty days after the end of the contract. This will facilitate having the silent second mortgage removed from the property.
Related article by House Refinance Center
Refinancing a Good Neighbor Next Door mortgage
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Add comment August 25th, 2010
