HUD Approves $731M in Funding For Communities Recovering from Foreclosures
- Mar 23, 2009
By Anuradha Kher, Online News EditorWashington D.C.–U.S. Housing and Urban Development Secretary Shaun Donovan has approved nearly $731 million in funding for 48 states and local communities seeking to recover from the effects of high foreclosures and declining home values. Funded under HUD’s Neighborhood Stabilization Program (NSP), these plans will target emergency assistance to particular neighborhoods by acquiring and redeveloping foreclosed properties that might otherwise be abandoned.The neighborhood stabilization plans approved include a $145 million plan submitted by the State of California.”These funds will be used to buy up and rehabilitate vacant foreclosed homes and resell those homes with affordable mortgages,” President Obama said in a statement. “They’ll allow California to provide mortgage assistance and rehabilitation loans for both low-income and middle-income families. This is how we’ll help people here in California live their dream of homeownership and how we’ll start transforming abandoned streets lined with vacant houses into thriving neighborhoods.””Our goal is to help communities throughout California turn these houses into homes again,” said Donovan. “California is clearly struggling with a brutal foreclosure crisis and we must make every effort to help to help communities prevent these foreclosed properties from becoming a source of neighborhood blight.” HUD’s Neighborhood Stabilization Program was created under the Housing and Economic Recovery Act of 2008 and provides nearly $4 billion to every state and certain local communities experiencing particularly high foreclosure problems and risk of property abandonment. The program permits these state and local governments to purchase foreclosed homes at a discount and to rehabilitate or redevelop them in order to respond to rising foreclosures and falling home values. In addition, the American Recovery and Reinvestment Act of 2009 makes available another $2 billion of NSP funding to state, local governments, non-profit entities, or consortia of non-profit entities for similar anti-blight and stabilization efforts. 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 to 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.The NSP Program also seeks to prevent future foreclosures by requiring housing counseling for families receiving homebuyer assistance.