Funding aimed at neighborhoods hard-hit by foreclosure
WASHINGTON – U.S. Housing and Urban Development Secretary Shaun Donovan today 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 become sources of abandonment and blight (see attached chart).
The neighborhood stabilization plans approved today include a $145 million plan submitted by the State of California, a program President Barack Obama recognized during a town hall meeting today in Los Angeles.
These are Tennessee’s allocations:
| Tennessee | Knoxville |
$ 2,735,980
|
|
| Tennessee State Program |
$ 49,360,421
|
Donovan today approved plans from Knoxville ($2,735,980) and the Tennessee State Program ($49,360,421) for communities seeking to recover from the effects of high foreclosures and declining home values. The total amount of funding totals $52,096,401. Funded under HUD’s new Neighborhood Stabilization Program (NSP), these communities will shortly begin to target emergency assistance to particular neighborhoods by acquiring and redeveloping foreclosed properties that might otherwise become sources of abandonment and blight.
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.
The NSP 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.
“These funds will be used to buy up and rehabilitate vacant foreclosed homes and resell those homes with affordable mortgages,” said President Obama. “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 lines with vacant houses into thriving neighborhoods.”
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. HUD will issue a funding notice with application requirements no later than May 3, 2009. Applicants will prepare an application and, for programmatic funding, complete citizen participation before submitting to HUD. HUD will review applications and make awards shortly thereafter.
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.
About HUD: HUD is the nation’s housing agency committed to sustaining homeownership; creating affordable housing opportunities for low-income Americans; and supporting the homeless, elderly, people with disabilities and people living with AIDS. The Department also promotes economic and community development and enforces the nation’s fair housing laws. More information about HUD and its programs is available on the Internet at www.hud.gov and espanol.hud.gov.
