3.9 Section J Attachment A9 Amend 0016.pdf

Attachment A9: Good Neighbor Next Door (GNND) Program

1. GNND Purchaser Eligibility Requirements

As described in Section 1.3.25.2.1, eligible purchasers under the GNND Good Neighbor Next Door (GNND) program include (i) full-time law enforcement officers, (ii) full time teachers and

(iii) full-time firefighters/emergency medical technicians. Additionally, there is a requirement that GNND purchasers, as of the date of submitting an offer to purchase a property under the GNND program, did not own and had not owned during the period of one year previous to that date, or any other residential real estate. Conclusive evidence of residential real property ownership is having one’s name on a deed. A GNND purchaser may be a signatory to other mortgages (debt) but may not have their name on any other deed for residential property.

Participants must provide a certification (Form HUD 9548-A) signed by themselves and their employing agency. This certification documents eligibility to purchase a home under the program by virtue of the nature of their job. The GNND participant further certifies that they will own the property, utilize it as their sole residence, and own no other residential real estate for a term of thirty-six (36) months from the date of closing.

Prior to execution of a sales contract for a GNND transaction, the Vendor shall ensure that the purchaser and the purchaser’s employer have executed Form HUD 9548-A. The Vendor shall review the certification to verify that it indicates that the purchaser meets the eligibility requirements specified at 24 CFR Part 291 Subpart F, as amended. If the purchaser does not meet the eligibility requirements, the Vendor shall cancel the bid acceptance and notify the COR of the reason for cancellation. If, at any time prior to closing, the Vendor obtains information that raises a question regarding the accuracy of the certification, the Vendor shall immediately notify the COR. After closing, the Vendor shall deliver the original Form HUD 9548-A to HUD’s National Servicing Center as indicated in item five (5) below.

2. Restriction of Program Sales to Single Unit Homes Only

Property eligible for sale through the GNND is restricted to single unit homes. In accordance with Section 1.3.25.2.1, the Vendor shall only offer single unit properties for sale to GNND eligible purchasers.

3. Second Mortgage and Note Taken On Discounted Amount of Sale (24 CFR 291.550)

A second mortgage and note on the 50% discounted amount is required in all GNND sales. The second mortgage and note are intended to act as an absolute bar to the sale of the property during the thirty-six (36) month required occupancy term without re-paying the appropriate portion of the discount.

The second mortgage is recorded in the appropriate local recorder of deeds office, or equivalent office. The second mortgage bearing an original stamp, seal or such other official evidence of recording, along with the original note, are retained by the HUD National Servicing Center for the duration of the thirty-six month occupancy period.

At the end of the required occupancy period, the NSC will cause a release to be issued and filed on behalf of the Department. Thereafter, the officer or teacher is released from all further performance obligations arising out of the GNND program. If a GNND participant ceases to occupy the property as their sole residence during the three-year occupancy period, they shall be liable for the prorated amount of the discount, according the chart below. The Vendor has no responsibility for monitoring occupancy or seeking refunds of prorated discounts.

TIME PERIOD AMOUNT OWED

Post-Closing to initial occupancy 100% of original mortgage amount Initial occupancy through month

1/36 of the discounted amount calculated at the end of the month next following the date non-compliance commences

Prior to closing the Vendor shall ensure that the package of closing documents submitted for execution by the Closing Agent includes the GNND second mortgage and note as described above executed by the purchaser(s). The Vendor shall be responsible for ensuring the accuracy (property address, legal description, mortgage and discount amounts and occupancy dates) of these documents. Following closing, the Vendor shall ensure that the Closing Agent records the second mortgage. As described below, the Vendor shall deliver the note and recorded second mortgage to the NSC.

4. Document Delivery

The Vendor shall forward a completed closing package for each GNND sale to the following address:

C&L Service Corporation 2488 East 81st Street Suite 700 Tulsa Oklahoma 74137

Toll-Free: (877) 622-8525 Local: (918) 935-2900 Fax: (918) 935-2994

For each property, the post-closing package shall include:

Sales Contract (Form HUD-9548) - copy or original

Law Enforcement Officer/Teacher/Fire Fighter/Emergency Medical Technician Certification (Form HUD-9548-A) - original.

Settlement Statement (Form HUD-1) - copy.

GNND Subordinate Note - original signatures required.

GNND Second Mortgage (Deed of Trust) – recorded original or a copy that has been certified by the County Recorder and has the County Recorder’s certifying seal. Copies that have been certified as originals by closing agents, attorneys, etc. are not acceptable.

Closing agents must be instructed to deliver recorded documents to the Vendor for packaging and transmittal to the NSC. Closing agents must not instruct County Recorders to deliver recorded documents directly to the NSC.

5. Servicing Responsibility

NSC has responsibility for the servicing of GNND Second Mortgages. These responsibilities include 1) subordination requests, 2) annual re-certification of occupancy compliance process, 3) requests to temporarily halt occupancy, 4) payoff requests and, 5) receipt of payoff funds.

The following policy statements are provided for informational purposes only; all requests for servicing exceptions on second mortgages received by the Vendor are to be referred to the NSC to the attention of the Director, or his or her designee at 877-622-8625. 297-8685.

Subordination of HUD’s Security Interest

It is the Department’s position that, during the required occupancy term the equity in GNND homes does not belong to the GNND participant, but rather to the FHA fund. The GNND participant “earns” the equity by remaining in the property for the required three-year term.

Therefore, HUD will subordinate a GNND second mortgage interest to refinancing ONLY in the following circumstances:

(1) Will result in a lower annual percentage rate (APR) on the first mortgage;

(2) Will be undertaken pursuant to HUD's Section 203(k) Rehabilitation Loan Insurance Program in order to rehabilitate or repair the home; or

(3) Is necessary to prevent the law enforcement officer, teacher, or firefighter/emergency medical technician from defaulting on the first mortgage.

Annual Certifications

Annual Self-certification by Officers and Teachers (24 CFR 291.565(b)) - GNND purchasers are required to certify annually in writing that they are occupying the purchased property as their sole residence. NSC maintains a list, by month, of all properties that closed during the previous three years.

Letters with a certification statement for signature by the GNND participant area mailed by the NSC at the first, second, and third anniversaries of the GNND sale closing. GNND participants are instructed to sign and return the self-certifications within fourteen (14) days. Instructions on the correspondence will inform mail carriers that the letter is not to be forwarded but that an address correction is requested if available.

Follow-up Letters - GNND participants that fail to respond within three weeks will be sent a follow up letter. GNND participants failing to return completed certifications by the twenty-first (21st) day after the initial mailing and for whom no forwarding address is available, or undeliverable notice has been received, will be sent a “second notice” follow-up certification letter.

Retention of Certification Records - The returned certification will be retained in the GNND participant’s folder. GNND participants who fail to respond within three weeks will be considered in default of their obligations under the GNND program.

6. Complaints, Investigations and Referrals to OIG

The Vendor shall immediate notify the COR of all complaints and allegations of program abuse relative to the GNND program or GNND program participants received by the Vendor. In the event that the Vendor has information implicating HUD staff in any program violation, the Vendor shall immediately report the allegation directly to HUD’s Office of Inspector General at 800 347-3735.