HUD allocates nearly $4 billion to stabilize neighborhoods in high foreclosure rate areasMortgagePress.comHUD, foreclosures, Steve Preston, Neighborhood Stabilization Program, Community Development Block Grant Program
U.S. Housing and Urban Development Secretary Steve Preston has
allocated a total of $3.92 billion to all states and particularly
hard-hit areas trying to respond to the effects of high
foreclosures. HUD's new Neighborhood Stabilization Program (NSP)
will provide targeted emergency assistance to state and local
governments to acquire and redevelop foreclosed properties that
might otherwise become sources of abandonment and blight within
their communities.
HUD plans to host a national housing summit in Washington, D.C.
on Oct. 7-8, as well as a series of regional conferences to explain
the details of this new program to governors, mayors, county
executives and other State and local leaders.
"To those areas trying to recover from the effects of
foreclosure and declining property values, help is on the way,"
said Preston. "Clearly, the intent is to put this money to work in
communities with the highest need and to have a meaningful impact.
Now the real work begins and HUD stands ready to support these
States and communities as they work to stabilize their
neighborhoods."
The funding is provided through HUD's Community Development
Block Grant (CDBG) Program under the Housing and Economic Recovery
Act of 2008. These targeted funds will be used to purchase
foreclosed homes at a discount and to rehabilitate or redevelop
them in order to respond to rising foreclosures and falling home
values.
State and local governments can use their neighborhood
stabilization grants to acquire land and property; to demolish or
rehabilitate abandoned properties; and/or to offer downpayment and
closing cost assistance to low- to moderate-income homebuyers
(household incomes not exceed 120 percent of area median income).
In addition, these grantees can create "land banks" to assemble,
temporarily manage, and dispose of vacant land for the purpose of
stabilizing neighborhoods and encouraging re-use or redevelopment
of urban property.
In determining the allocations announced today, HUD followed
Congress's direction that grants be targeted to areas based on the
number/percent of foreclosures, subprime mortgages and mortgage
defaults and delinquencies. HUD took a data driven approach to this
process, relying on numerous data sets from government agencies and
private sources.
HUD also will issue specific rules that will assist communities
in the administration of this new program and to ensure, as
Congress directed, that these grant funds be obligated for specific
activities within 18 months. This Congressional timetable may
present challenges to state and local governments undertaking
ambitious, and in some cases unprecedented, acquisition and
rehabilitation activities. Meanwhile, HUD is actively encouraging
local governments receiving direct grants to coordinate with each
other, and with their state governments, to make most effective use
of available funds.
The NSP Program also seeks to prevent future foreclosures by
requiring housing counseling for families receiving homebuyer
assistance. In addition, the Agency seeks to protect future
homebuyers by requiring States and local grantees to ensure that
new homebuyers under this program obtain a mortgage loan from a
lender who agrees to comply with sound lending practices.
For more information, visit www.hud.gov.
