By Paige Tepping
RISMEDIA, September 29, 2008-U.S. Housing and Urban Development (HUD) Secretary Steve Preston allocated a total of $3.92 billion to all states and particularly hard-hit areas trying to respond to the effects of high foreclosures, the organization announced on Friday. HUD’s new Neighborhood Stabilization Program (NSP) will provide targeted emergency assistance to state and local governments to acquire and redevelop foreclosed properties that might otherwise become sources of abandonment and blight within their communities.
The funding is provided through HUD’s Community Development Block Grant (CDBG) Program under the Housing and Economic Recovery Act of 2008. These targeted funds will be used to purchase foreclosed homes at a discount and to rehabilitate or redevelop them in order to respond to rising foreclosures and falling home values.
“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,” said Preston. “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,” he added.
Every state will get a share of the money, and the municipalities will be responsible for deciding which communities have the biggest need for the funds. “We have worked hard to come up with a formula in order to allocate the money directly to the communities that need it most,” said Preston. “By law, every state must receive a minimum grant of $19.6 million,” added Preston.
HUD and Congress are working closely together to make sure that communities are aware of the stipulations that are laid out within the neighborhood stabilization grants.
“Congress put together very specific guidelines as to how the money can be allocated,” said Preston. Under Congress’ plan, the money will be granted to areas which have the greatest needs based on foreclosures, subprime mortgages and other key factors.
“Communities will receive their money as quickly as they submit a plan that complies with the program,” said Preston. “The speed of the review process depends entirely on the quality of the plan that is submitted. If it complies with the program, we can turn it around within a few days,” added Preston.
“We are encouraging communities to work with their local and state governments to make the most effective use of the available funds,” said Preston. “They have to be quick as Congress requires state and local governments 18 months to work on their plan as to how they will effectively spend and distribute the money,” concluded Preston.
HUD plans to host a national housing summit in Washington, D.C. on October 7-8, as well as a series of regional conferences to explain the details of this new program to governors, mayors, county executives and other state and local leaders.
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