FHA Single Family Housing Policy Handbook 4000.1, Part IV — d. Prospective Buyers (01/02/2020)

FHA Single Family Housing Policy Handbook 4000.1, Part IV — d. Prospective Buyers (01/02/2020)

d. Prospective Buyers (01/02/2020) i. Owner-Occupant Buyers (A) Definition An Owner-Occupant Buyer is a buyer who intends to use the Property as their Principal Residence. (B) Standard A buyer may purchase HUD REO Properties as an Owner-Occupant Buyer if: • they certify that they will occupy the Property as their Principal Residence for at least 12 months; and • they have not purchased a HUD-owned Property within the past 24 months as an owner occupant. The selling broker must not knowingly submit the offer on behalf of a person or entity that is not an Owner-Occupant Buyer and must discuss the penalties for false certification with the buyer. The buyer and selling broker must sign a Purchase Addendum for Individual Owner- Occupant Buyers certifying to the above conditions. IV. CLAIMS AND DISPOSITION B. Title II Disposition 2. REO Property Disposition Handbook 4000.1 1634 Last Revised: 11/26/2025 Buyers using FHA-insured financing must begin their owner-occupancy terms as stated in FHA Requirement for Owner Occupancy. Buyers purchasing under the Good Neighbor Next Door (GNND) Sales Program must begin their owner- occupancy terms as stated in Owner-Occupancy Term. (C) Required Documentation The Owner-Occupant Buyer and selling broker must complete and submit with their offer a Purchase Addendum for Individual Owner-Occupant Buyers. ii. Investor Buyers An Investor Buyer is a buyer who will not occupy the HUD REO Property as their Principal Residence. iii. Good Neighbor Next Door Participants (A) Definitions Good Neighbor Next Door (GNND) Participants are law enforcement officers, teachers, firefighters, or emergency medical technicians who are eligible to purchase HUD REO Properties under the GNND Sales Program. Locality is the community, neighborhood, or jurisdiction of the unit of general local government or Indian tribal government. A Unit of General Local Government is a county or parish, city, town, township, or other political subdivision of a state. (B) Standard GNND participants may purchase designated single-unit HUD REO Properties in Revitalization Areas at a discount of 50 percent off the list price. The GNND participant must bid the full list price; the AM will reflect any applicable discounts in the sales price. (C) Eligible Participants Buyers must meet all of the following requirements in order to purchase through the GNND Sales Program. The AM will ensure that Buyers are eligible to participate in the program. (1) Full-Time Employment as a Law Enforcement Officer, Teacher, or Firefighter or Emergency Medical Technician At the time the bid is submitted and at the time of closing, the buyer must be employed full-time as one of the following: IV. CLAIMS AND DISPOSITION B. Title II Disposition 2. REO Property Disposition Handbook 4000.1 1635 Last Revised: 11/26/2025 • a law enforcement officer: o who is employed full-time by a law enforcement agency of the federal government, a state, a unit of general local government, or an Indian tribal government; o whose full-time employment, in the normal course of business, directly serves the locality in which the home is located; and o who, in carrying out such full-time employment, is sworn to uphold, and make arrests for violations of, federal, state, tribal, county, township, or municipal laws; • a teacher: o who is employed as a full-time teacher by a state-accredited public school or private school that provides direct services to students in grades pre-kindergarten through 12; and o whose full-time employment, in the normal course of business, serves students from the locality where the home is located; or • a firefighter or Emergency Medical Technician (EMT): o who is employed full-time as a firefighter or EMT by a fire department or emergency medical services responder unit of the federal government, a state, unit of general local government, or an Indian tribal government serving the locality where the home is located. The buyer must certify to their good faith intention to continue employment as a law enforcement officer, teacher or firefighter/EMT for at least one year after the date of closing. (2) Purchasing as Owner-Occupant Buyer The buyer must agree to own, and live in as their sole residence, the purchased Property for the owner-occupancy term of 36 months and certify that occupancy annually. (3) Execution of Second Mortgage and Note The buyer must agree to execute a second Mortgage and Note on the house for the difference between the list price and the discounted selling price. (4) Restrictions Related to Previous GNND Sales Program Purchases The buyer nor their spouse must not: • have owned any residential Real Property during the year before they submitted a bid on the Property to be purchased through the GNND Sales Program; and • have purchased another house under the GNND Sales Program. IV. CLAIMS AND DISPOSITION B. Title II Disposition 2. REO Property Disposition Handbook 4000.1 1636 Last Revised: 11/26/2025 (D) Eligible Properties GNND participants may purchase designated single-unit HUD REO Properties under the GNND Sales Program that are located: • in a HUD-designated Revitalization Area; and • in the community where the GNND participant works (applicable to teacher and firefighter/EMT buyers only). iv. Governmental Entities and HUD-Approved Nonprofits (A) Definitions A Governmental Entity refers to any federal, state, or local government agency or instrumentality. To be considered an Instrumentality of Government (IOG), the entity must be established by a governmental body or with governmental approval or under special law to serve a particular public purpose or designated by law (statute or court opinion). HUD deems Section 115 entities to be IOGs for the purpose of providing secondary financing. HUD-approved Nonprofit organizations approved to participate in FHA nonprofit programs are eligible to purchase HUD REO Properties. (B) Purchasing as Owner-Occupant Buyers (1) Standard Governmental Entities and HUD-approved Nonprofits are included in the definition of Owner-Occupant Buyers and may purchase Properties during the same periods in which Owner-Occupant Buyers may purchase. HUD-approved Nonprofits are responsible for compliance with their Affordable Housing Program Plan (AHPP). (a) Purchases during Direct Sale Periods When purchasing HUD-owned Properties at a 10 percent or greater discount as part of a direct sale, Governmental Entities and HUD-approved Nonprofits must complete and submit with their offer a Land Use Restriction Addendum (LURA). (b) Purchases during Competitive Sales Periods (i) Exclusive Listing Period Governmental Entities and HUD-approved Nonprofits may purchase Properties during the exclusive listing period as long as they: • certify that they will own the Property for at least 12 months; IV. CLAIMS AND DISPOSITION B. Title II Disposition 2. REO Property Disposition Handbook 4000.1 1637 Last Revised: 11/26/2025 • have not purchased a HUD-owned Property during the exclusive listing period within the past 24 months; and • complete and submit an Exclusive Listing Period Purchase Addendum for Governmental Entities and HUD-Approved Nonprofits with their offer. (ii) Extended Listing Period Governmental Entities and HUD-approved Nonprofits may purchase Properties during the extended listing period and are not required to complete an Exclusive Listing Period Purchase Addendum for purchases made without discount. (2) Required Documentation Where applicable, the Governmental Entity or HUD-approved Nonprofit must complete and submit with their offer a LURA or Exclusive Listing Period Purchase Addendum for Governmental Entities and HUD-Approved Nonprofits. (C) Use of Selling Brokers HUD will not pay selling broker commission for Properties purchased by Governmental Entities and HUD-approved Nonprofits. Where guidance in this section directs the selling broker to perform a specific action, a designated agent of the Governmental Entity or HUD-approved Nonprofit may perform this action. (D) Discounts on Direct Sales For direct sales, Governmental Entities and HUD-approved Nonprofits may purchase HUD REO Properties at the following discounts on the list price: • 30 percent off the list price for uninsured Properties located within a Revitalization Area; • 10 percent off the list price for insured or uninsured Properties located outside of a Revitalization Area; • 10 percent off the list price for insured Properties located within a Revitalization Area; and • 15 percent off the list price for insured or uninsured Properties located outside of a Revitalization Area and insured Properties located in a Revitalization Area when: o the AM has accepted five or more bids from the Governmental Entity or HUD-approved Nonprofit within a 15 business day period; and o the sales are closed in a single transaction. IV. CLAIMS AND DISPOSITION B. Title II Disposition 2. REO Property Disposition Handbook 4000.1 1638 Last Revised: 11/26/2025 (E) Restrictions on Resale Governmental Entities and HUD-approved Nonprofits must comply with the restrictions on resale as stated in an executed LURA or Exclusive Listing Period Purchase Addendum. To request exceptions to the restrictions on resale, the Governmental Entity or HUD- approved Nonprofit may submit a request in writing to HUD. v. HUD Employees (A) Standard HUD employees and members of HUD employees’ households are eligible to purchase HUD REO Properties as Owner-Occupant Buyers if: • they do not currently own a house and can demonstrate and certify that they will occupy the Property as their Principal Residence for at least two years; • they have not purchased a HUD-owned Property within the past 24 months as an owner occupant; and • they are not prohibited buyers. Eligible HUD employees and members of their households must obtain supervisor and Office of Single Family Asset Management (OSFAM) approval before bidding on a HUD-owned Single Family house. (1) Form HUD-50001, HUD Employee/Relative: Home Purchase Certification The HUD employee must complete form HUD-50001, HUD Employee/Relative: Home Purchase Certification, by: • describing their job and/or relationship to the proposed buyer; • certifying that they have no involvement with the management and oversight of the M&M contractors’ activities; and • obtaining their immediate supervisor’s signature. (2) Approval by the Office of Single Family Asset Management The HUD employee must email the signed form HUD-50001 to the Director of OSFAM for approval. OSFAM will notify the employee if they are approved to purchase HUD REO Properties. (3) Period of Eligibility to Bid The approved HUD employee or member of the HUD employee’s household is eligible to bid on HUD REO Properties for up to 12 months from the date of the approval. IV. CLAIMS AND DISPOSITION B. Title II Disposition 2. REO Property Disposition Handbook 4000.1 1639 Last Revised: 11/26/2025 (4) Recertification The approved HUD employee or member of the HUD employee’s household must re-certify by completing form HUD-50001 and obtaining the required approvals in the event of any job change. (B) Required Documentation The HUD employee must complete and submit with their offer a Purchase Addendum for Individual Owner-Occupant Buyers. The HUD employee must include on the Addendum their Social Security Number (SSN) and date of birth. vi. Prohibited Buyers The following are prohibited from purchasing HUD REO Properties. (A) HUD REO Staff The following HUD employees and their household members are prohibited from purchasing HUD REO Properties: • all HUD management personnel who are part of the management chain that has authority over the Single Family REO disposition process; • all headquarters OSFAM employees; • all HUD employees that have direct or indirect responsibilities for policy development, procurement, and disposition of Single Family REO Properties; and • all HOCs, field and regional offices’ employees that have direct or indirect oversight responsibilities of M&M contractors. (B) Participants in HUD REO Marketing and Management Certain participants involved in the management, listing, and/or marketing of HUD REO Properties, and their immediate Family Members, are prohibited by contract from engaging in activities that would involve a real or apparent conflict of interest, to include the purchasing of HUD REO Properties. Such parties should contact the Contracting Officer’s Representative (COR) for information on eligibility to purchase HUD REO Properties. (C) Members of Congress Members or delegates of the United States Congress are prohibited from purchasing or benefiting from a purchase of a HUD REO Property. (D) Former Borrowers who Defaulted on FHA-Insured Mortgages Former Non-Occupant Borrowers of FHA-insured Mortgages, whose Default resulted in HUD’s payment of a mortgage insurance benefits claim to a Mortgagee, are IV. CLAIMS AND DISPOSITION B. Title II Disposition 2. REO Property Disposition Handbook 4000.1 1640 Last Revised: 11/26/2025 prohibited from repurchasing the same Property that secured the FHA-insured Mortgage.

Source: FHA Single Family Housing Policy Handbook 4000.1, Part IV — d. Prospective Buyers (01/02/2020) · source URL · snapshot 8c03836f77f317e1