Rewarding Good Neighbors

HUD's program for community-service workers offers significant savings on homes, according to Carrington Real Estate Services REALTOR® Laura Key

Jul 07, 2015, 10:02 ET from Carrington Real Estate Services

ANAHEIM, Calif., July 7, 2015 /PRNewswire/ -- There are many people who work to make our communities better, frequently for little pay and often at great risk to themselves. They give themselves to our cities and towns, and the U.S. Department of Housing and Urban Development (HUD) has a little-known program that attempts to give back to them.

The Good Neighbor Next Door program is specifically for law-enforcement officers, firefighters, emergency medical technicians (EMTs), and pre-kindergarten through 12th grade teachers. Through this program, these community-service workers that meet the program's eligibility requirements can purchase a HUD home for 50 percent off of the list price. In return, they must live in the house for three years as their only residence. These homes are offered in HUD-designated revitalization areas, which often are in large urban centers like Los Angeles, Baltimore or Phoenix.

But in order to participate in this program, you have to know about it first. And therein lies the problem. Laura Key, a REALTOR® with Carrington Real Estate Services in Long Beach, California, has been working with the Good Neighbor program for nearly 10 years, and when she reaches out to community-service workers about the program, she finds that most have never heard of it.

"It is really important for the public to at least know that this program is available," Key says. "It seems like nowadays we don't help the people who are vital to our community -- the people who take care of and educate our children, who take care of our community and often risk their lives. This program has a special place in my heart because I believe it builds community."

Although Key currently works in the Los Angeles area, she previously worked in Denver. In both locations, she has sought out community-service workers to educate them about the Good Neighbor Next Door program. Since the program requires potential homebuyers to live in the district in which they work, Key has found the most success with teachers. "Law enforcement officers generally don't like to live where they serve for protection purposes," Key says. "Teachers don't mind living in the district that they serve because they know the kids." In fact, after just a few months of reaching out to various schools in the L.A. area, she already has identified 30 to 35 prospective buyers.

The demand is there, but the supply is much more limited. In fact, it's pretty tight. Often, HUD only offers a handful of listings scattered across the country. And when a listing goes up, it goes fast. Key makes it a habit to check HUD's listings twice a day, because these homes never make it to the local Multiple Listing Service (MLS), which many real estate agents and websites rely on to identify properties available for sale. "There is no logic to where, how much, what condition, what area," Key says. Homes can need massive rehabilitation, or nearly none at all. HUD can put up two listings in one month for a particular area, or two months can go by without a single listing. "Buyers interested in the program need to be both patient and ready to go at all times," Key says.

Once offered by HUD, potential homebuyers enter a lottery system for the home; all bids are the same, so there's no competing amounts. When a buyer is chosen, they purchase the home with a first and a second mortgage. The first covers all fees and commissions, any rehabilitation costs the buyer may need, and 50 percent of the list price. The second is "silent," and no interest or payments are required if the buyer completes the three-year occupancy requirement. Buyers must prequalify for the full amount of the mortgage at the time of purchase, because if they don't complete the three-year occupancy requirement, they are responsible for the full loan. HUD is strict about its guidelines for this program and will check that buyers are actually living in the home. But once a buyer fulfills their three-year obligation, the second mortgage is gone, and they are free to sell the home and recoup any equity.

Financing a Good Neighbor home is similar to any other home purchase, and cash, conventional mortgages, Federal Housing Administration (FHA) loans or U.S. Department of Veterans Affairs (VA) loans are eligible for use. In fact, if buyers qualify for an FHA loan, their downpayment may be minimal and closing costs can be financed. The FHA 203(k) mortgage also allows for rehabilitation costs in excess of $5,000 to be rolled into the mortgage, which is particularly useful as these homes are sold in "as is" condition.

There are further rules and guidelines to take into account, and a real estate agent or broker is required for purchase. For example, potential buyers cannot have owned a home in the previous 12 months to purchasing a Good Neighbor house, and the same is true for their spouses. And for real estate agents filling out the required contracts, things are a little bit different, as well. "It's government paperwork, it's not your traditional state contracts," Key says. "And if they are not filled out correctly, it's possible that complications will arise and a client could lose the property."

With few homes being offered, buyers interested in the program should enlist the help of experienced real estate agents who know how the system works and can better their chances at coming away with a home at a steep discount. "There are a lot of people who don't want to deal with it, because the program is kind of hard to work," Key says, "but once you know it, you know it inside and out."

In her nearly 10 years of working with the Good Neighbor Next Door program, Key has seen interest grow, thanks in part to her own outreach efforts. "I would like to see more growth with HUD," she says. "This really is such a wonderful program, and I believe that these community-service workers deserve to be helped, because they help the community out of the goodness of their hearts."

To learn more about the Good Neighbor Next Door program, visit To find currently listed homes, check out the HUD Homestore.

Media Contact:
Christine Stricker
Office: (949) 517-7313
Mobile: (714) 873-4275

Logo -


SOURCE Carrington Real Estate Services