HUD Doles out Another $1B to Stabilize Hard-Hit Neighborhoods
Original Post Date: September 8, 2010
By: Carrie Bay
HUD awarded an additional $1 billion Wednesday to state and county governments to help communities reverse the effects of the foreclosure crisis and assist with the cleanup of vacant homes. The grants represent the third round of Neighborhood Stabilization Program funding, earmarked for acquiring, redeveloping, or demolishing foreclosed properties. All 50 states, as well as the District of Columbia and Puerto Rico have been designated to receive allocations.
HUD Secretary Shaun Donovan says the funds have been targeted to areas with “especially high foreclosure activity” to “help turn the tide in our battle against abandonment and blight.”
The $1 billion in NSP funding announced Wednesday was made available through the Dodd-Frank Wall Street Reform and Consumer Protection Act. This third round follows nearly $4 billion in NSP grants awarded in 2008 and $2 billion appropriated in 2009. HUD says today, 95 cents of every dollar from the first round of NSP funding is obligated – and is in use by communities, buying up and renovating homes, and creating jobs.
State and local governments can use their neighborhood stabilization grants to acquire land and property; to demolish or rehabilitate abandoned homes; and to offer downpayment and closing cost assistance to low- to moderate-income homebuyers. In addition, the grantees can create “land banks” to assemble, temporarily manage, and dispose of vacant properties.
Last week, HUD announced a new nationwide REO “First Look” program, in partnership with the nation’s largest mortgage lenders. The initiative gives NSP participants an exclusive 12-14 day window to evaluate and bid on foreclosed homes in their areas before the properties are marketed to other buyers.
HUD says the program will maximize the impact of NSP dollars in the hardest-hit neighborhoods and cut in half the traditional 75-to-85 day process it takes to resell foreclosed properties.
In addition to a third round of NSP funding, the Dodd-Frank Reform Act creates a $1 billion Emergency Homeowners Loan Program to be administered by HUD. This program will provide up to 24 months in mortgage assistance to homeowners who are at risk of foreclosure and have experienced a substantial reduction in income due to involuntary unemployment, underemployment, or a medical condition.
HUD says it will announce additional details of the emergency loan program, including the targeted areas and other program specifics, when the program is officially launched in the coming weeks.