The US Department of Housing and Urban Development (HUD) changed how it defines foreclosed and abandoned properties to include properties in default and uninhabitable homes with code violations. Effective immediately, homes that are 60 days or more behind on the mortgage can be considered foreclosed under the new definition. The changes will increase the amount of properties that qualify for the Neighborhood Stabilization Program (NSP). HUD awards grants through the program to purchase and redevelop foreclosed and abandoned homes to stabilize local communities. HUD secretary Shaun Donovan said the original NSP rules limited the program’s impact. “The rules needed to be more flexible so our local partners can put taxpayer dollars to work quickly to stabilize neighborhoods hard-hit by foreclosure,” Donovan said. Before the changes, HUD defined a “foreclosed” home as a property where the foreclosure process was completed. Because so many homes are currently held up in the foreclosure pipeline – either through the court system or the government’s own incentive programs – HUD changed the definition to include any property either 60-plus days delinquent on the mortgage, 90-plus days behind on tax payments, or where the foreclosure process has been initiated or completed under state or local law. The term “abandoned” defined a foreclosed property standing vacant for at least 90 days. However, it excluded properties abandoned by the owner but held tenants in place. To give HUD grantees the ability to protect a tenant’s occupancy, the term was changed. Now, an “abandoned” property includes any home where no mortgage or tax payments have been made for 90 days, or an inspection of the home determines that the property is not habitable and the owner took no corrective action within 90 days of notice. “It became clear to us that the Neighborhood Stabilization Program as originally designed was too restrictive and limited the ability of our local partners to put this funding to work quickly,” said Mercedes Márquez, assistant secretary for community planning and development. “We need to be more flexible so our local partners can respond to market conditions and reverse the effects of foreclosure in these neighborhoods as quickly as possible.” Write to Jon Prior.

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