One of HUDs objectives is to provide the opportunity for home ownership to some who have not previously been able to own a home. HUD has established some special programs to meet that goal.
FHA has designated Revitalization Areas in some geograpihic areas that have been extremely hard hit by the housing crisis. The National Housing Act has given FHA this authority and enables HUD to help promote homeownership which in turn will enable growth and expansion in the areas with the aid of federal assistance for for affordable housing. The criteria for designation is based on:
- Average Household Income
- Homeownership Rate
- FHA-insured mortgage foreclosure activity
The special HUD programs offer HUD owned homes at discounted prices.
- Asset Control Areas (ACA)
State, County and local governments, as well as Non Profits, may contract with HUD to make ACA properties exclusively available to the ACA particpipant. Properties appraised at $25,000 or less may be purchased for $100 (We received a notice from one of the Asset Managers that this program was no longer available, I have not been able to confirm yet); all other properties are offered at a 50% discount of appraised value.
- Good Neighbor Next Door (GNND)
The GNND program allows full time law enforcement officers, pre-kindergarten through 12th grade teachers and fire fighters/emergency medical technicians, in addition to approved non-profits and government organizations, the opportunity to purchase HUD homes in a revitalization area at 50% of the list price.
Buyers must agree to live on the home as their primary residence for 36 months. The discounted amount is a silent second, with no payment due on the second nor is any interest accrued, so long as the residency requirement is met. The second is forgiven at the end of the 36 month period. Buyers cannot have owned any real estate for one year prior to the purchase. Should the buyer not meet the residency requirement, they will incur substantial penalties. Bids are submitted as with other HUD homes by a registered HUD broker.
Non profits and government agencies must be approved by HUD to participate and must present a plan that identifies the areas they wish to participate in and buy homes, they are restricted to only those areas.
These programs are available for the 5 Day Pre-Sale period before the home is for sale to the public (see my part 5 blog for information on the different sales periods) The winning bidder will be selected by lottery from those that agree to the terms of the program and who meet all the requirements. The offer is made at full price and the appropriate discount is given at settlement.
To find out if you have a designated area in your market go to HudHomestore. There is more information on all these programs on this site. The site has been updated and is an excellent source of information on HUDs programs.
If you are interested in working to get an area designated contact your regional HUD HOC.
As always, as a HUD Co-Listing Broker, I am available to answer any questions you may have. If I do not know the answer, I will research and do my best to get one. We are holding training classes in our area, contact me if you are interested.
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