HUD
01-073
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In the Washington, DC area: (202) 708-0685
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For
Release
Wednesday
August 01, 2001 |
HUD Resumes Sales of Discounted Homes to Officers and Teachers
en español
WASHINGTON - The U.S. Department of Housing and Urban Development announced
today that it is resuming its Officer Next Door and Teacher Next Door home sales
programs after taking a number of corrective measures to prevent homebuyer fraud.
HUD suspended the programs on April 1 following nine felony convictions and
15 indictments involving police officers who purchased homes. The HUD Inspector
General also released a report criticizing the programs' management controls.
The programs offer police officers and teachers a 50 percent discount on HUD-owned,
single family homes in certain designated revitalization areas. The homes become
available to HUD after homeowners default on their FHA-insured mortgages.
"Both programs are proven winners for the communities. Officers and teachers
get homeownership opportunities, young people living nearby get excellent role
models and communities grow stronger and healthier," said HUD Secretary Mel
Martinez. "While most of the officers and teachers who purchase houses through
these programs play by the rules, there is no doubt we needed to implement more
aggressive monitoring and tighten controls in the program."
Martinez highlighted the following corrective actions taken during the three-month
suspension:
- HUD staff involved in the OND/TND sales process have completed a "top-to-bottom"
review of program procedures;
- HUD's contracts with closing agents across the country have been modified
to require that the Department will hold a secured note on each property sold,
helping to ensure that its occupancy requirements by program participants
are fully enforceable;
- HUD will increase the number of periodic site visits to selected properties
to ensure that program participants are residing in the properties;
- HUD's National Servicing Center in Oklahoma City has been designated the
coordinating office for OND/TND sales records, compliance monitoring, administrative
actions and Inspector General referrals;
- Outside contractors will assist in program compliance monitoring using
computerized checks of public and private databases and establishing a web-based
system to screen program applicants;
- A training video outlining program requirements will be required viewing
for all OND/TND purchasers; and,
- In addition to criminal convictions and indictments of program violators,
HUD is taking administrative action, including demanding repayment of discounts,
against 54 program participants.
Martinez expects that heightened program controls will greatly reduce or eliminate
future program abuse, and that ongoing investigations by HUD's Inspector General
may result in additional charges being filed against some individuals who purchased
homes before the stronger management controls were implemented.
"By working together with our Office of Inspector General, we can ensure the
integrity of these programs and preserve an important affordable housing tool
for families living in vulnerable neighborhoods," Martinez said.
"We are extremely gratified that Secretary Martinez has reinstated this important
program," said Gilbert G. Gallegos, national president of the Grand Lodge, Fraternal
Order of Police. "The Officer Next Door program has a positive impact on public
safety, and strengthens the ties between America's law enforcement officers
and the communities that they are sworn to protect and serve."
"The escalating teacher shortage requires school systems to employ innovative
approaches to attract and retain teachers, and this is especially true in low-income,
urban neighborhoods," said Sandra Feldman, president, American Federation of
Teachers. "The Teacher Next Door program is a creative and practical way to
entice teachers to the communities where they are needed most. Schools are cornerstones
on the community and this program will help deepen the bonds between neighborhood
schools and communities throughout the country, while strengthening teacher
recruitment efforts."
Since HUD created the officer and teacher programs in 1997 and 2000, respectively,
approximately 6,000 police officers and teachers in 41 states and the District
of Columbia have purchased the homes.
To be eligible, law enforcement officers and teachers must be employed full-time
and agree to make the homes their sole residence for three years following the
purchase. In addition, teachers must work in the areas in which the homes are
located.
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