(12-03) 04:00 PST Washington — Federal housing authorities are adding first responders to a restructured program designed to get government-owned homes into the hands of workers who are seen as the key to improving the quality of life in distressed urban communities.

Under a rule adopted last month, firefighters and emergency medical technicians join police officers and teachers in a Good Neighbor Next Door program that allows them to purchase foreclosed houses in designated neighborhoods at half their appraised values. But only those employed by a government agency are eligible. First responders working for non-government entities do not qualify, even though they may provide the same services.

Their inclusion, a Department of Housing and Urban Development spokesman explained, would create ambiguity in assessing eligibility and be too costly.

The program, which was offered to full-time law enforcement officers in 1997 and then expanded to include educators and firemen, allows participants to purchase HUD-acquired homes in revitalization areas at a 50 percent discount from their list prices.

Since its inception, 11,633 foreclosed houses have been sold at half price to participants — 7,073 to police officers, 4,498 to teachers and 62 to firefighters and medical technicians.

Revitalization areas are neighborhoods in need of economic and community development where there is a strong commitment by the local governments. There are hundreds of such areas throughout the country.

The new rules take effect Dec. 1, more than a year after they were proposed.

While the changes open the door to more participants, other parts of program have been tightened. For example, buyers cannot have owned residential property for one year prior to submitting an offer.

The change was necessary, according to HUD, because homeowners have had difficulty selling their properties in time to close on their Good Neighbor homes. In addition, participants and their spouse may not have previously purchased a home under the plan or its predecessors. At the same time, however, the prohibition against owning other residences during the required occupancy term is being dropped as “an unduly burdensome restriction on business activity.”

Participants must agree to live in the homes they purchase under the program as their sole residence for 36 months, starting on the day they close on the sale. Those using conventional financing may not borrow more than the price of the house. But those who use government loans can roll their share of reasonable and customary closing costs into the loan amount. Buyers with FHA loans also will be permitted to roll the cost of improvements and repairs to the property in the loan amount.

But the program will be a little more expensive than it has been in the past. The government will no longer pay closing costs or sales commissions, making the buyer responsible for those charges.

However, purchasers using FHA-insured financing can continue to include reasonable and customary closing costs in the loan.

Source:

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2006/12/03/REGMDMN7BD1.DTL