Funding aimed at neighborhoods hard-hit by foreclosure
WASHINGTON, D.C. – January 09, 2009 – (RealEstateRama) — U.S. Housing and Urban Development Secretary Steve Preston today approved plans from the State of Louisiana and the City of New Orleans seeking to recover from the effects of high foreclosures and declining home values. Funded under HUD’s new Neighborhood Stabilization Program (NSP), Louisiana and New Orleans will target emergency assistance to particular neighborhoods by acquiring and redeveloping foreclosed properties that might otherwise become sources of abandonment and blight.
The State of Louisiana intends to target $34.2 million to high-need communities within the Bayou State and New Orleans will direct $2.3 million to certain of its neighborhoods to help control the potential for abandonment and blight. With HUD’s approval, Louisiana and New Orleans will be able to implement their action plans shortly.
“It is critical that we work closely with State and local governments to put this money to work as quickly as possible to help these communities recover from the effects of foreclosure and declining property values,” said Preston. “Stabilizing neighborhoods is what this program is all about. HUD will continue to work closely with these communities to make certain these funds are targeted to neighborhoods with the greatest needs.”
HUD’s Neighborhood Stabilization Program was created under the Housing and Economic Recovery Act of 2008 and provides nearly $4 billion to every State and certain local communities experiencing particularly high foreclosure problems and risk of property abandonment. The program permits these State and local governments 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 (household incomes not exceed 120 percent of area median income). 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.
The NSP Program also seeks to prevent future foreclosures by requiring housing counseling for families receiving homebuyer assistance. In addition, the Agency seeks to protect future homebuyers by requiring States and local grantees to ensure that new homebuyers under this program obtain a mortgage loan from a lender who agrees to comply with sound lending practices.
HUD is the nation’s housing agency committed to increasing homeownership, particularly among minorities; creating affordable housing opportunities for low-income Americans; and supporting the homeless, elderly, people with disabilities and people living with AIDS. The Department also promotes economic and community development and enforces the nation’s fair housing laws. More information about HUD and its programs is available on the Internet at www.hud.gov and espanol.hud.gov.