HUD offers special mortgage programs for law enforcement personnel.
The United States Department of Housing and Urban Development, or HUD, offers the "Good Neighbor Next Door," or GNND, mortgage program for individuals working in law enforcement. Federal, state and local government law enforcement personnel who work full-time, have taken an oath to uphold the law and can make arrests during the normal course of their job duties qualify for the GNND program. Law enforcement personnel for Native American governments also qualify for the program.
Benefits
The GNND program allows law enforcement personnel to purchase a home for 50 percent of the list price of the home. For example, if a seller has a home listed at $200,000, the GNND purchase price is half that, or $100,000. Lenders then write the remaining discounted amount as silent second mortgage. This silent second mortgage does not require borrowers to make any payments on principal or interest as long as they meet residency restrictions.
Residency Restrictions
Once the borrowers purchase a home, it must be their primary residence and they must remain in the home for at least three years. As proof of their residency, HUD requires borrowers to complete and return an annual residency certification letter. Once borrowers meet the three-year minimum residency requirement, HUD releases them from the any obligation for the balance on the silent second mortgage. Borrowers using the GNND program cannot own second homes for one year prior to the date they submit their GNND program application.
Available Homes
Not all homes for sale qualify for the GNND program. Only homes must be on the Good Neighbor Next Door Sales program list qualify for purchase through this program. Most homes on the Good Neighbor Next Door Sales program are in HUD revitalization areas, which vary by state. All offers on these homes must be for the full listing price. Once the seller accepts the offer, the GNND buyer receives the 50 percent discount off the list price.
Penalties
If borrowers fail to meet the residency restrictions, HUD can require the borrowers pay the balance on the silent second mortgage. This penalty does not apply to those called up for active military service. If the borrowers do not fill out and send in their residency certification letter on a yearly basis, then HUD launches an investigation. If the investigation finds the borrowers no longer live in the home, they are subject to fines, possible jail time and will have to pay the balance on the silent second mortgage.
