Officer Next Door Program
The Officer Next Door program that was established
by the Department of Housing and Urban Development (HUD) is designed to
offer single-family houses, townhouses and condominiums for sale to
officers at a 50 percent discount. The goal is to encourage Officers to
buy homes in low and moderate-income neighborhoods.
These neighborhoods, referred to as revitalization
areas, are specifically designated neighborhoods that are receiving
targeted public and private sector assistance in order to promote local
economic growth.
As a result, HUD is offering a 50% discount on
qualifying homes. Since the supply of qualifying homes is severely
limited, homes are sold through a lottery system. In addition, Officers
purchasing qualifying homes with FHA-insured mortgages will only need
$100 for a down payment (versus the traditional 3% required on other
types of property).
The Officer Next Door program is open to any sworn
law enforcement officer that works for the city, county state or Federal
law enforcement agency that has the power to arrest (i.e. the general
power of arrest, not limited power of arrest). This includes college or
university police with the general power of arrest. Correctional
officers, on the other hand, generally are not eligible unless they have
the general power to arrest outside of the correctional facility. In
addition, other criminal justice employees such as probation or parole
officers, court services officers, etc. are not generally eligible.
An officer must live in the home for a minimum of
three years as his or her primary residence. An officer is not required
to stay with the law enforcement agency during the three year residency
requirement. A buyer cannot own any other real estate at the time of
closing. In addition, the sales price of qualifying homes is not
negotiable. An applicant must always pay HUD’s asking price.
Upon successfully winning the bid, HUD does not
automatically discount the property by 50%. Instead of automatically
giving the new home owner instant equity, HUD places a “silent second”
against the home for the discounted amount. No interest or payments are
assessed on the second lien if the home owner lives in the home for the
required three years. All profits earned after the three year period are
the home owners.
Depending upon the circumstances, failure to
fulfill the three year residency requirement may have serious
consequences. HUD may restrict the home owner from selling the property
for no more than 110% of the original sales price. In addition, HUD may
require all or part of the discounted amount to be repaid. Generally the
pro-rated repayment amount goes as follows: repayment of 90% of the
discounted amount during the first year, repayment of 60% of the
discounted amount during the second year, and repayment of 30% of the
discounted amount during the third year. Should fraud or other serious
charges suspected, HUD may file criminal charges against the Officer,
ban the Officer from further participation from any HUD, FHA, and other
Federal programs, and may face the possibility of serious fines and
potential prison time. HUD will conduct “spot checks” during the first
three years to insure that the residency requirement is being fulfilled.
Qualifying homes are restricted to specifically
designated single family homes, townhomes and condominiums that are
located within the revitalization areas. Other types of properties, such
as a duplex or triplex, do not qualify for this program. In addition,
the homes must be HUD acquired homes and cannot be other real estate for
sale in the area (i.e. VA foreclosure homes, resale homes or new
construction). HUD sells all qualifying homes as-is. In other words, HUD
does not provide any guarantees or warranties
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