HUD house for sale
Home being put on the market by HUD, offering discount to teachers, firefighters and police. Tim FischerReporter-Telegram
Posted: Thursday, June 12, 2014 11:38 pm
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Updated: 11:49 pm, Thu Jun 12, 2014.
Midland Reporter-Telegram
Most Midlanders could only dream about purchasing a three-bedroom house for less than $100,000 in today’s market, but a government program may make it a reality.
The U.S. Department of Housing and Urban Development, through its “Good Neighbor Next Door” program, offers a 50 percent discount to law enforcement officers, teachers, firefighters and emergency medical technicians who are in the market for a home.
The house, however, must be HUD-owned and located within a region designated by the department as a “revitalization area.”
HUD deems revitalization areas after it reviews household income, homeownership rate and foreclosure activity among mortgages insured by the Federal Housing Administration.
Midland has two revitalization areas — one near the southwest corner of Wadley Avenue and Midland Drive. The other is between Big Spring Street and Lamesa Road, south of Scharbauer Drive. The number of houses in each area is not specified.
Warren Ivey, a local Realtor, said the areas are relatively small and it’s rare to find a HUD-owned property inside Midland’s designated regions.
But one qualifying house finally became available Wednesday, the first to do so since 2011, Ivey said. The window for public servants to take advantage of the discount is limited.
The house, at 405 Elm Ave., is listed for $190,000 and HUD will offer the discount until 11:59 p.m. Tuesday, Ivey said. If no one submits a bid, the property will be listed on the market at full price Wednesday.
The program requires applicants to be approved for a mortgage equal to the full listing amount, which cannot be negotiated. Additionally, the home must be the applicant’s “primary residence” for three years, meaning it cannot be an investment property used to earn rent.
If HUD receives multiple offers, it will select a winning bid at random, Ivey said. Each offer is essentially identical because each bid must be for the exact listing price.
Once an offer is accepted, the new homeowner will sign two mortgage notes. HUD holds the note for one of the mortgage notes, valued at the discount amount. Homeowners will not have to make payments or pay interest on the “silent second” mortgage as long as they live in the home for three years.
In the case of Midland’s one qualifying house, HUD would forgive the $95,000 secondary mortgage after three years and the homeowner would pay the other $95,000.
The Elm Avenue home has three bedrooms, two bathrooms and a two-car garage. Excluding the garage, the house is 1,639 square-feet and was built in 2006, according to the Midland Central Appraisal District.
If the homeowner moves out of the house before three years have passed, he or she would be responsible for paying the full listing price. That’s why the applicants must qualify to borrow the full listing price, Ivey said.
The biggest issue, however, is most people don’t know when these property come on the market, and when they do, they’re only available at the discounted price for seven to 10 days, Ivey said, noting these properties are not listed on the Multiple Listing Service.
Visit www.sfgis.hud.gov/index.html to search for qualifying properties nationwide.
“I see the prices of our houses here in Midland and I see the rental prices here in Midland,” Ivey said. “I know the teachers are hurting for housing [but] I don’t know how they would know about this property.”
Any qualifying public servant interested in this house should contact a local Realtor, Ivey said. The majority of Midland’s real estate agents are registered to conduct business with HUD.
“Time is very critical in this,” Ivey said. “If you think you’re going to make an offer, let’s get you started now. These people need to contact a lender and see if they’re even qualified to borrow the money but that’s going to take time.”
There’s no timeline for when the next home will be available through the Good Neighbor Next Door program. It always depends on when a HUD-owned house comes on the market in a designated revitalization area.
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Thursday, June 12, 2014 11:38 pm.
Updated: 11:49 pm.
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