Federal housing authorities are adding "first responders" to a restructured program aimed at getting 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 earlier this month, firefighters and emergency medical technicians join police officers and teachers in a new "Good Neighbor Next Door" sales 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 as their government colleagues.

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

Since its inception, 11,633 foreclosed houses has been sold at half price to participants -- 7,073 to cops, 4,498 to teachers and 62 to firefighters and medical technicians.

Revitalization areas are HUD-designated neighborhoods in need of economic and community development and where there is already 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 first proposed.

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

The change was necessary, according to the HUD spokesmen, because previous owners 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 new plan or its predecessors. At the same time, however, the prohibition against owning any 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 role 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 either a buyer's closing costs or the agent's sales commission, making the buyer "wholly responsible" for those charges.

However, purchasers using FHA-insured financing can continue to include other "reasonable and customary closing costs" within the borrowed amount.

Published: November 22, 2006

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When Lew Sichelman first started writing about housing in 1969, he was the youngest real estate writer in the country. Now, 37 years later, he's one of the oldest -- and most decorated. He has been rated the top housing columnist in the country by the National Association of Realtors as well as by his peers in the National Association of Real Estate Editors. Indeed, NAREE has recognized his work on numerous occasions. One year - due to his advancing age, he can't recall which one - he earned top honors in the annual NAREE Journalism Contest in three out of the four major writing categories. It was the first time one writer has won so many NAREE awards in a single year. Known for his ability to make even the most difficult topics understandable, Sichelman also has been honored by the National Association of Home Builders and the Mortgage Bankers Association. He began providing in-depth coverage of and consumer-oriented information about housing and housing finance at the Washington Daily News, where he was real estate editor. He held that same position for nine more years at the Washington Star, which purchased the News in 1972. The Star, a so-called "writer's newspaper" which also had the misfortune of being an evening paper, was put out of its misery in 1981, and Sichelman, who had begun self-syndicating his column in 1978, decided to become a full-time columnist. Today, his column, "The Housing Scene," is distributed by United Media to newspapers throughout the country. He also is on the staff of National Mortgage News, an independent newspaper which is considered the bible of the mortgage business. And he writes for numerous other publications, including MarketWatch.com, where he answers readers questions once a week, Sports Illustrated (don't ask), RealtyTimes.com, BigBuilder and others. Sichelman is married, the father of five and grandfather of eleven.