The Department of Housing and Urban Development
awarded another $1 billion in funding through its Neighborhood Stabilization Program and has now doled out about $7 billion in two years.
The program was designed to provide state and local communities money to acquire, redevelop or demolish foreclosed properties. This is the third round of NSP grants, following roughly $4 billion
awarded in September 2008 and another $2 billion
The latest round was cleared through the signing of the Dodd-Frank Act in July. The first round came through the Housing and Economic Recovery Act of 2008, and the second round arrived through the American Recovery and Reinvestment Act of 2009. According to HUD, 95% of the first two distributions have been obligated.
The Dodd-Frank Act also creates a $1 billion Emergency Homeowners Loan Program to be administered by HUD. The program will provide up to 24 months of mortgage assistance to unemployed homeowners at risk of foreclosure.
"These grants will support local efforts to reverse the effects these foreclosed properties have on their surrounding neighborhoods," HUD Secretary Shaun Donovan said. "We want to make certain that we target these funds to those places with especially high foreclosure activity so we can help turn the tide in our battle against abandonment and blight."
Through the First Look program announced last week, NSP grantees get an exclusive 12- to 14-day window to bid on these foreclosed properties before investors. State and local governments can also use the money to provide assistance on down payments or closing costs to low- or moderate-income homebuyers. To be eligible, households cannot earn more than 120% of the area median income.
HUD will issue guidance on how potential grantees can design their programs when applying for the grants.
Write to Jon Prior