HUD Neighborhood Stabilization Program

www.g-sig.com

The federal government is realizing that diminished home values have a growing correlation to the amount of foreclosures a particular neighborhood may incur additionally; vacant and abandoned properties reduce the attractiveness as well as the value of the neighborhood as a whole.

The Neighborhood Stabilization Program has been implemented nationwide to prevent this from happening. Under the new program $3.92 Billion in grants have been allocated for all 50 states, territories and nonprofit organizations with one common goal – to stabilize our neighborhoods.

Under this new program state and local authorities are given the funds to purchase homes that are foreclosed and/or abandoned with the intent to resell, rehabilitate or redevelop these properties with the goal of stabilizing neighborhoods, and reduce the decline of home values for neighboring properties.

In 2008 the government asked each state, county, city and nonprofit organization to submit their action plan. Based on this action plan funds were allocated. Each state receives a minimum of $19.6 Million, approximately ½ % of the total fund.

The action planed detailed exactly how each body would go about buying, selling or rehabilitating local areas in distress. The funds that are allocated can be used for any of the following:

Establishing a financing mechanism for buying and redevelopment of foreclosed properties, that can be attained by those borrowers who have low and/or moderate income.

Purchasing foreclosed properties to either live or rehabilitate, particularly those properties that have been abandoned for a while in order to increase the overall value of a neighborhood.

Funds can also be used to demolish and/or redevelop vacant properties that they feel have been an unlivable or an eye sore.

There are a few requirements when receiving these funds for example, at least 25% of total funds received must be used to purchase and redevelop abandoned property or foreclosed property OR properties that will be used to house families whose income is substantially less than the average income of the area.

Lastly, funds must be disbursed in order of need the fund gives priority to those area’s with the greatest need and is calculated by the following:

1. Areas with the greatest foreclosure percentage.
2. Areas with the greatest number of homes financed by sub-prime mortgages
3. Areas predicted to face the greatest rise in foreclosure rates.

For the South Florida Foreclosures, particularly West Palm Beach, Broward, and Miami-Dade you can take a look at their action plan here:

West Palm Beach - http://www.cityofwpb.com/housing/NSP%20amend%20Exhibit%20A.pdf

Broward County - http://www.broward.org/housing/actionplan_fy08.pdf

Miami –Dade County - http://www.miamidade.gov/eap/library/08-10-18-NSP_Status_Report.pdf