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Half-priced homes from HUD: What to know

WASHINGTON – Dec. 4, 2015 – The Department of Housing and Urban Development’s (HUD) 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 HUD-owned foreclosure properties in areas earmarked for revitalization.
To be eligible, buyers must agree to live in the home for at least three years, and they can’t have owned any other residential property within the previous year.
The home prices of the HUD properties are cut in half, but buyers must still qualify for a loan equal to the full price of the property.
HUD also requires purchasers to sign a “silent second” mortgage for the amount that the property was discounted. The buyers won’t pay the interest or principal for that second mortgage as long as they live in the property for the three years. At that point, 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 hudhomestore.com.
If multiple buyers come forward on a property, HUD will select the winner through a random lottery, Kelly says. If no buyers come forward, 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.
Source: “HUD Homes at Half Price,” The New York Times (Nov. 27, 2015)
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Source: Florida Realtors Feed

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