Today an agent/friend called and asked me to put together some marketing collateral for teachers. I immediately began my research, thinking of a Department of Community Affairs program that loves teachers. Then I remembered The Teacher Next Door, a program established by HUD to offer single-family houses, condominiums, and townhouses to teachers at a 50 percent discount. If the "HUD acquired home" cost $150,000, the borrower pays only $75,000. How's that for a bargain? It gets even sweeter. The teacher may also apply for a FHA-insured mortgage with a down payment of only $100 and he/she may finance all closing costs. Are you loving this yet?
Well, there's more to the story.
The goal of this program is to encourage teachers to buy homes in revitalization areas across the nation. As per the guidelines, you must be "employed full-time by a public school, private school, or federal, state, county, or municipal educational agency as a state-certified classroom teacher or administrator in grades K-12."
However, there are property type restrictions (i.e. No duplexes, no triplexes). Also, the homes cannot be other real estate for sale in the area (so forget the 3-bedroom home in the new subdivision down the street-no new construction). HUD sells all qualifying homes as-is and it does not provide any warranties.
The good news-there are tons of revitalization areas across the country listed and sold exclusively over the Internet. Every week a bid is awarded. And the bid must be the amount of the list price. The computer randomly selects each bid and it is posted each week on the web. I advise clients to enlist the services of a professional real estate agent even though they think they understand the program requirements and bidding process.
It's important to note that a borrower will be required to sign a silent second mortgage and note for the discount amount. No interest or payments are required as long as they fulfill the three-year occupancy requirement. For this point alone, I recommend that a borrower read the fine print carefully. It turns out there are no free rides, even on a good neighbor program. Here are a few URLs that will provide more information on this program.
For Frequently Asked Questions, go to http://www.hud.gov/offices/hsg/sfh/reo/goodn/gnndfaq.cfm
To find out where these properties are located, visit: http://www.hud.gov/offices/hsg/sfh/revite/abtrevt.cfm
For a Teacher Pre-qual Questionnaire:
A great niche in a down market. Many teachers have never heard of this program and the targeted areas may be right in your backyard. And a similar program exists for firefighters.
Here's to your success,
The FHA Originator