U.S. Housing and Urban Development (HUD) Secretary Shaun Donovan said today the Obama administration will work with Congress to funnel more funding to communities struggling with foreclosures.
Donovan said the administration will work with Congress to find ways to help state and local governments combat the ongoing effects of the housing crisis and home foreclosures through additional funding for the department’s Neighborhood Stabilization Program (NSP) and foreclosure prevention counseling. He made the announcement today at a roundtable with Washington, D.C.-based reporters sponsored by the Christian Science Monitor.
The administration also announced plans to reallocate funds awarded through NSP1 that have not yet been committed to specific projects, in order to drive more funding to hardest hit communities. HUD has already awarded nearly $6 billion in NSP grants to help state and local governments respond to rising foreclosures and falling home values — $4 billion funded NSP1 through the Housing and Economic Recovery Act of 2008 (HERA), and an additional $2 billion funded NSP2 through the American Recovery and Reinvestment Act of 2009 (Recovery Act).
The initial NSP1 funds provided each state government with a "base allocation" of $19.6 million, without regard to varying degrees of need. Eighteen months later, the department will recapture money from communities that have not yet committed NSP1 funding, and reallocate it to city and county governments with very high foreclosure and/or vacancy rates and their jurisdiction, based on more recent data.
Additionally, the Administration plans to work with Congress on new foreclosure counseling efforts to help homeowners facing foreclosure stay in their homes. HERA provided $150 million for housing counseling to connect homeowners with their mortgage servicer or lender to explore options that will keep them in their homes as a result of these counseling funds. Additional funds in this area would broaden the administration’s reach in its ongoing foreclosure prevention efforts, officials said.
The Neighborhood Stabilization Program was created to address the housing crisis, create jobs and grow local economies by providing communities with the resources to purchase and rehabilitate vacant homes. The NSP grants that HUD has awarded are helping state and local governments, as well as non-profit developers, acquire land and property; demolish or rehabilitate abandoned properties; and/or offer downpayment and closing cost assistance to low- to middle-income homebuyers.
