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*When you buy a home under HUD's Officer or Teacher Next Door initiatives, you receive a 50% discount off the list price of the home. At closing, you will be required to sign a second mortgage and note for the amount of the discount. For example, if you bought a home for $100,000, you would receive a $50,000 (50%) discount. A second mortgage for this $50,000 discounted amount would remain in effect for a period of three years from the date of your closing. If you leave the home prior to completing your three year mandatory occupancy period, you will be required to re-pay HUD a portion of the discount you received as follows:
Prior to 1st Anniversary of Closing - 90% ($45,000 in the above example)
Prior to 2nd Anniversary of Closing - 60% ($30,000 in the above example)
Prior to 3rd Anniversary of Closing - 30% ($15,000 in the above example)
The second mortgage is called a 'silent second' because no interest accrues on it and no payments are required. When you complete your mandatory three year occupancy period, HUD will automatically cancel this instrument and you will only have your first mortgage in place from that time forward. Copies of the second mortgage and note can be found in HUD Housing Notice 99-30 which can be downloaded at
www.hudclips.org. The Notice can be found under 1999 Housing Notices. (Hint: After printing the letter which is in the beginning of the Notice, click on the word "attachment" to the left of the signature block. This will load the policy and procedure manual in which the documents are located.)
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