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What is a HUD home and the "Good Neighbor Next Door Program"?

You may have heard the term "HUD home" from time to time and wondered what these properties actually were. HUD homes are properties that have been repossessed following the original owners failing to keep up with mortgage payments. A series of foreclosure proceedings takes place and the home once possessed, goes on to become a HUD home. This is because the property is now managed by the U.S. Department of Housing and Urban Development.

The HUD (Housing and Urban Development Department) becomes the rightful owner following foreclosure and will then seek to sell off the property to a new buyer in order to recover the costs. If you are a member of the public and want to bid on a HUD home you would need a realtor to place a bid for you and the real estate agent must be registered to bid on a HUD home (they will instantly be able to tell you whether they are registered or not).

HUD homes are often located in an area where revitalization is taking place. These are urban areas which may have had a high crime rate or poor development in the past and are now becoming areas where the local government and state housing departments are taking action to improve the area. Good Neighbours – Every District Needs Good Neighbors.

One of the programs to help improve an area which is undergoing revitalization is to buy a HUD home and become part of the Good Neighbour Next Door Scheme. This is where police officers, nurses, teachers, key health personnel, fire fighters, emergency services personnel and doctors can buy a HUD home and bring the level of the neighbourhood up. The incentive is the hefty discount on offer to key personnel buying into a HUD home. Those that have key personnel skills receive a 50 percent discount on the HUD home they buy providing they have lived there for a minimum period of three years. (HERE is more information and a Q&A for this program).
To call a home a "HUD home" is a bit of a misnomer in some respects. The HUD (Housing and Urban Development Department) is not actually a lender or owner but in fact an administrator/agency that serves as an appointee in selling the home on following foreclosure.
The original mortgage used to purchase a home, which would now be classed as a HUD home, would have been insured by the Federal Housing Administration (FHA).
For more information on available HUD homes in your area, CONTACT us to put you in touch with the right registered Realtor.

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