Asked Questions about the Good Neighbor Next Door Program.
1) Who are you guys?
Rob Sipes and Robert Kaetzel of Real Estate Professionals, Inc. We are
real estate licensees in the State of Maryland and sell the majority
of the homes available under the program here. We have helped over 100
people purchase a home at a 50% discount. We are affectionately known
by our clients as "The Robs". We are also the preferred real
estate agents in Maryland who work in conjunction with Bruce Arrant,
Good Neighbor Next Door Realty, Inc, www.gnnd.com
We are the experts who can help you be successful with the Good Neighbor
Next Door Program (GNND Program).
2) What is HUD?
HUD is the Department of Housing and Urban Development, an agency of
the federal government.
3) How are you involved?
HUD says that if you want to purchase a Good Neighbor Next Door home
you must utilize the services of a HUD registered licensed real estate
broker. That's us!
4) Can I deal with any
real estate agent that I want?
Yes you can, however the agent's brokerage must be HUD registered. Not
every real estate brokerage is. It's a good idea to deal with someone
who has experience with the program as it can be a quite complicated
and bureaucratic. Most real estate agents have never participated in
a Good Neighbor Next Door sale. If they are unfamiliar with the program
and the process of navigating a Good Neighbor Next Door sale, they can
screw things up for you pretty badly.
5) How does a house become
a HUD Home and qualify for the Good Neighbor Next Door (GNND) program?
The Federal Housing Administration (FHA), which is a part of the Department
of Housing and Urban Development (HUD), provides federal mortgage insurance
to Mortgage Lenders. This guarantees that Mortgage Lenders will be reimbursed
in the event home buyers default on their mortgage. When a Mortgage
Lender is forced to foreclose on an FHA-insured single family home,
townhouse, duplex, triplex, fourplex or condominium because the owner
can no longer make payments, the Mortgage Lender can file an claim with
FHA for the balance due on the mortgage and convey title of the property
to HUD. If that home is in a geographically coded area declared as a
Revitalization Zone, then it may be placed for sale under the GNND program.
GNND homes are offered to participants BEFORE the General Public has
an opportunity to buy them.
6) Are all HUD homes
eligible for the GNND program?
No. Only a select few properties that are HUD acquired are available
for the GNND program. Do not wait for the perfect house or perfect location.
If a home is listed that you can qualify to purchase and it meets you
minimum housing needs, then always try to take advantage of the opportunity.
It is only a three year commitment and then you can sell the home, keep
it as a rental, or live in it as long as you want. Most GNND participants
live in their homes well beyond the three year residency requirement.
7) Where do I obtain
financing for the home?
You can use any Mortgage Lender of your choice and any type of financing.
However, to take advantage of the $100.00 down payment program, you
must use FHA 203B or 203K financing. Please keep in mind that it is
difficult or impossible to combine other assistance programs with the
GNND program. It is also not usually possible to use a Veterans Administration
(VA) loan on most properties.
8) What happens if no
one enters the lottery drawing?
If no one enters the Lottery for a home during the exclusive 7 day GNND
listing period the home will be marketed to the general public at full
price. The property will not be available for purchase under the Good
Neighbor Next Door Program again.
9) What does IN, IE,
and UI mean?
HUD homes are listed three ways "IN" Insurable, "IE"
Insured with Escrow, and "UI" Uninsurable. This has nothing
to do with home owner's insurance coverage, and everything to do with
whether the property qualifies or meets minimum property standards (MPS)
for an FHA type loan. In order to obtain an FHA Insured Loan, FHA requires
that a home meet certain requirements and standards. "IN"
Insurable means the property in its present condition appears to meet
all minimum property standards to qualify for an FHA loan without any
repairs. "IE" Insured with Escrow means that there are some
deficiencies that do not meet the minimum property standards, but the
home does qualify for an FHA 203B with Repair Escrow loan. These deficiencies
or minimum property standards violations are things like a broken hot
water heater, minor roof repairs, peeling paint, missing flooring or
damaged drywall etc... It has been estimated by the appraiser of the
property that all the repairs would cost $10,000 or less to meet minimum
property standards. The Repair Escrow amount is not paid by HUD and
is added to the Buyers total loan amount. The Buyer has 30 days to make
the repairs and then after an inspection; your Lender releases the repair
escrow money to you. "UI" Uninsurable means that it has been
estimated that repairs needed to bring the property back up to minimum
property standards would cost more than $10,000. This property does
not qualify for FHA 203B financing, but as with most HUD properties
it does qualify for FHA 203(K) financing or 203(K) streamline financing.
FHA 203K Financing is a property acquisition loan and home improvement/repair
loan all rolled into one. Some HUD homes cannot qualify for any type
of FHA financing but they are very rare. These properties can only be
purchased with conventional financing methods or cash.
This part can get confusing
and we are available to walk you through the financing process to help
you arrange the financing that is best for you.
10) Should I get Prequalified
for a mortgage?
Yes! Get started on the mortgage loan process through an FHA Lender
who has experience with the 203K and 203B loan products as soon as possible.
You must be pre-qualified by a mortgage lender unless you are paying
cash. You are welcome to call your credit union or your own lender to
arrange for financing but in our experience this is a very bad idea.
Most credit unions don't do these types of loans. Most lenders have
never heard of the program and will likely screw it up. If you would
like to be pre-qualified for a Good Neighbor Next Door Purchase, you
can fill out our pre-qualification
request form. Once we receive your information, it only takes a
day or two for one of the lenders that we work with to get a copy of
your credit report and to call you. There is no cost or obligation to
11) When does the Lottery
drawing take place and when will I find out if I won?
The lottery drawing takes place eight days after the house is listed,
unless it falls on a weekend or Federal holiday. All lottery entries
must be received before midnight (CST) the seventh day. All Winners
are notified the following day of the lottery. If the initial winner
does not close, then the option to buy the house goes to the backup
entrant. Backup winners may be notified weeks or even months after the
lottery drawing has taken place.
12) Should I look at
every home that becomes available before I enter the lottery?
Yes! Remember these homes are FORECLOSURES and are often neglected for
several months prior to HUD taking ownership. HUD sells property "as
is" and does not fix them up for curb appeal. Make sure the AREA
is right for you and the repair escrow or 203K loan will take care of
the house fix up expenses.
13) What if I win a home
and then change my mind about purchasing it?
If you decide not to purchase the home after your contract has been
accepted by HUD, then you will lose your earnest money. HOWEVER, should
the Buyer become unable to get financing, illness, job loss, or death
of immediate family member, or for other good cause, then the earnest
money will be refunded to the Buyer. Any money spent on inspections,
surveys, structural engineer reports or utility connections will not
14) What is the maximum
amount that can be financed for repairs on the FHA 203K loan?
You can borrow up to 110% of the total appraised value for acquisition
of the home, repairs, remodeling, upgrades, and appliances with the
regular 203(k). And up to $35,000 on the streamline 203(k).
15) Who makes repairs
and improvements to the homes?
On the FHA 203(B) with Repair Escrow, the Buyer hires a licensed Contractor
to make the needed minimum property standard minimum property standards
repairs ($10,000 or under). Prior to closing the Contractor must submit
a bid to the mortgage company which declares the amount estimated for
repairs is sufficient to cover the actual cost of the work. The money
held in the repair escrow account will not be paid to the contractor
or reimbursed to the Buyer until after the repairs are completed and
inspected. On an FHA 203(K) or 203(K) Streamline, only FHA approved
licensed contractors can make repairs and do improvements to your home,
but check with your mortgage lender for additional contractor requirements
such as references and/or credit checks, etc.
16) What are my chances
of getting a home?
The chances of winning are directly proportional to the number of entries.
Many homes have been awarded to participants because they were the only
lottery entry. If one Teacher, one Firefighter and one Officer were
all in the lottery drawing for the same home, everyone has an equal
chance and 33% chance of winning.
17) How long does it
take to close on a home?
Homes with an "IN" or "IE" designation usually close
in 45-60 days after the drawing. Homes designated "UI" usually
close 60 to 75 days after the drawing.
18) If I am moving to
another state when can I start entering the Lottery for homes in my
You can start entering the Lottery in other states as soon as your employment
can be verified and you are considered a FULL TIME employee in your
19) What if my spouse
or I own a home?
Current homeowners can no longer participate and you cannot have owned
any residential real property for 365 days prior to lottery submission.
Also, you are considered a current home owner if your spouse owns a
home or has owned a home within the last 12 months. Vacant land, vacant
lots, timeshares and any mobile homes or travel trailers that are taxed
as personal property are not considered residential real property in
20) Am I restricted to
bidding on properties in any particular area?
Currently Law enforcement officers may purchase any eligible
GNND home within a reasonable commuting distance from the officer's
employment. A 90 minute commute has been deemed reasonable in the past.
Teachers and Firefighter/EMT
purchasers are restricted to homes that are located in the areas
served by their employer. Examples: A Prince George's County teacher
can only purchase a GNND home located in PG County. A Baltimore County
firefighter can only purchase a GNND home that is located in Baltimore
County. A Baltimore City teacher can only purchase a GNND home that
is located in Baltimore City. Private school teachers
21) How much earnest
money do I have to put down?
After the property has been awarded to the Buyer, earnest money must
be submitted with the contract for purchase and all GNND addendums.
The program requires 1% of the listed price to be presented at time
of contract submission in the form of certified funds (cashier's check
or money order) payable to the buyer's title company. The minimum amount
of earnest money is $500.00 if the listed price is below $50,000.00
and the maximum is $2,000.00 for homes appraised over $200,000.
22) How does the $100
down payment work? What about Closing Costs?
If you choose to take advantage of the FHA $100 down payment, then all
normal closing costs, repairs, improvements, broker commissions and
fees associated with the acquisition of the property are added to your
total loan amount and are part of your mortgage. You can choose to pay
these expenses out of pocket if you like but most people don't.
23) There are several
homes I want. Can I enter the Lottery on more than one property?
Yes! HUD does not allow you to choose homes if you are the winner of
more than one house. You will be awarded the first property won and
any subsequent wins will be passed on to the next entrant. The order
in which Lotteries are conducted is random.
24) What continuing obligations
apply to me if I purchase a GNND home?
Continue to own, and live in as your sole residence, the home you purchased
through the Good Neighbor Next Door Program. Certify initially and once
annually that this is true for three years. The residency requirement
is extended to 42 months if you utilize renovation financing.
25) May I purchase a
multi-unit property if I plan to live in one of the units as my sole
No. Only single-unit properties are eligible for the Good Next Door
26) What happens if I
get called to active military duty and get deployed?
Participants called up to active military duty and are deployed are
provided clemency in regards to the owner occupancy requirements of
the program for the time frame that they are deployed. Participants
on deployed military duty are not required to occupy the property and
are allowed to rent the property (only while deployed) if necessary
to minimize potential vandalism risk. Written permission must be obtained
from HUD prior to renting your GNND home if you find yourseld in this
27) Can I sell the Good
Neighbor Next Door Home and keep the profit?
YES! After you live in the GNND home for the entire occupancy term,
you can sell the home and keep all the equity and appreciation. Most
occupancy terms are just three years. Homes sold FHA 203B with repair
escrow are 3 years and 30 days. Homes acquired through FHA 203K financing
are 3 years 6 months occupancy term. Some of our past clients have profited
over $100,000.00 (tax free) after purchasing the property and living
it for the occupancy term.
28) Can I bargain with
HUD on the price of a property?
No. The Lottery winner gets a 50 percent discount off of the listed
price. You can't offer less than or more than the listed price of the
home. All Good Neighbor Next Door homes are listed at the as-is appraised
value of the property. Appraisals are obtained prior to putting the
property on the market by HUD's management and marketing contractor.
29) How long do I have
to live in the GNND home?
You must live in your GNND home as your primary residence for at least
3 years after closing. This time is extended 30 days for an Insurable
with Escrow property and 180 days for UI property purchased with FHA
30) What happens if I
fail to honor the 3-year residency requirement?
HUD can demand re-payment of the discounted amount on a prorated basis.
That means you would have to re-pay to HUD based on a percentage of
the 36 months (3 years) you owned and lived in the home. If you received
a $60,000 discount on a $120,000 home and sold the home after 18 months
(One and half years), then HUD will take $30,000 (half the discount)
from the proceeds of the sale. At the end of the occupancy term there
are no restrictions or penalties on the sale of the property. Occupancy
term is extended six months for a home purchased with an FHA 203K rehab
31) I have a foreclosure
on my credit. Can I still participate in the program?
Yes, but FHA financing will not be available until three years after
the foreclosure. If you have the funds available, then you can pay cash
and not finance anything.
32) During the 3 year
occupancy term can I rent out my GNND home and live somewhere else?
No. Only if you are called up for active military duty and deployed,
then you may rent out or lease your GNND home after written approval
33) Why is my Social
Security number required to enter the lottery drawing?
This is HUD's requirement and it is the only way to make sure every
participant enters the lottery only one time on any given home and that
they have NOT previously purchased a GNND home. We use a secure page
and form to make sure that your personal information is secure.
34) What if the winner
cannot close on the home they won?
If a lottery winner cannot close on the home, then a Backup participant
will be notified they have the option to purchase the home. A primary
Winner and two Backups are selected for each lottery drawing if there
are at least three participants. Backup winners could be notified of
selection in as little as 3 days or up to 3 months after the drawing.
35) How can I get more
Call or email us any time. You can reach our office 24 hours a day by
calling 410-697-4600. You can also contact us through our web form located
at the bottom of the main