source:
  type: guide
  id: hud-4000-1-iv-d-prospective-buyers
  authority: FHA Single Family Housing Policy Handbook 4000.1, Part IV — d. Prospective
    Buyers (01/02/2020)
  description: FHA Single Family Housing Policy Handbook 4000.1, Part IV — d. Prospective
    Buyers (01/02/2020).
  coverage_tier: operative
obligations:
- id: hud-4000-1-iv-d-prospective-buyers-full
  canonical_id: hud-4000-1-iv-d-prospective-buyers-full
  section: FHA Single Family Housing Policy Handbook 4000.1, Part IV — d. Prospective
    Buyers (01/02/2020)
  type: do
  tags:
  - regulator-direct
  - fha
  - hud-handbook
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: FHA Single Family Housing Policy Handbook 4000.1, Part IV — d. Prospective
      Buyers (01/02/2020)
    source_class: hud-handbook
    source_url: https://www.hud.gov/hud-partners/single-family-handbook-4000-1
    snapshot_id: 8c03836f77f317e1
    fetched_at: '2026-05-23T00:28:40Z'
    content_hash: sha256:411430f29b13f9b54a2ebb0e6f6e7087ecd2b90d0da22eb0c8c792eaa2d7d0df
    paragraph_quote: '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.'
  judgment: false
