HUD Lobbies for More Federal Funding to Stabilize Housing Markets

Thu, May 20, 2010


HUD Secretary Shaun Donovan is asking Congress to release additional funds to help communities combat the ongoing effects of the housing crisis and home foreclosures. He says the Obama administration is committed to working with lawmakers to secure a third round of funding for HUD’s Neighborhood Stabilization Program (NSP).

The federal agency has disbursed $6 billion through NSP — $4 billion in the first round of funding in late 2008, and another $2 billion in early 2010. The money is awarded to state and local governments and non-profit developers to buy and rehabilitate or demolish vacant and foreclosed homes in their communities.

Some recipients have used the money to create land banks to assemble, temporarily manage, and dispose of foreclosed homes. The grants can also be used to offer downpayment and closing cost assistance to low- and middle-income homebuyers.
HUD says so far, the first round of NSP funding has touched 63,000 homes, by enabling acquisition, demolition, homebuyer assistance, and new construction. The initial NSP1 funds provided each state government with a “base allocation” of $19.6 million, without regard to varying degrees of need.

Donovan said HUD plans to reallocate funds awarded through NSP1 that have not yet been committed to specific projects, in order to drive more funding to hard-hit communities with high foreclosure and vacancy rates.

HUD estimates that 70 percent of the first round of NSP grants will be obligated to projects by the 18-month deadline set forth under the program – in September or October 2010, depending on the grant date. That would leave $1 billion that the agency could recapture.

Donovan explained that following a 30-day review period, funds that grantees have not yet committed to specific projects will be reallocated either to new grantees or as additional funds for first round recipients.

The administration is also asking Congress to give HUD more money for foreclosure counseling. Along with the first round of NSP funding, HUD received $150 million earmarked for advisory services to connect struggling homeowners with their mortgage servicer or lender to explore options for preventing foreclosure.

“HUD is committed to helping local communities recover from the blight and vacancies that have become visual symbols of difficult economic times.” Donovan said. “We have much more work to do to mitigate the impacts that foreclosures have had on local communities; however, innovative collaborations between local government, housing agencies, and non-profits and creative…uses of federal funds will…put us on the path to recovery.”

Leave a Reply