WASHINGTON, DC- U.S. Senators Bob Casey (D-PA), Patrick Leahy (D-VT), Arlen Specter (D-PA) and Kirsten Gillibrand (D-NY) today introduced an amendment to provide state and local governments with more flexibility in using funds allocated by the Department of Housing and Urban Development (HUD) under the Neighborhood Stabilization Program (NSP).
“A disturbing byproduct of the increased rates of foreclosures is that entire communities are being affected and local economies are being dragged down,” said Senator Casey. “We have to get these neighborhoods stabilized efficiently and quickly and we must give the states the flexibility to allocate the funds so that more families and communities don’t suffer.”
“Addressing the housing crisis is a vital step in moving the country toward economic recovery. This amendment will give states tools they need to rehabilitate or redevelop homes in order to stabilize neighborhoods. That will help communities in Vermont and around the country address the issues brought on by increased foreclosures,” said Senator Leahy.
“Halting the wave of foreclosures is critical to sparking an economic recovery,” Senator Specter said. “This amendment includes key provisions of a bill I introduced last year to ensure that more attention, counseling and resources are directed toward preventing foreclosures, stabilizing the housing market and getting the economy back on track.”
“During these tough economic times, we need to help our communities prevent foreclosure,” said Senator Gillibrand. “This amendment will give communities the resource needed to provide counseling and foreclosure prevention programs that will keep families in their homes. Communities need these tools and resources to help promote economic growth in New York and throughout the country.”
“This amendment will give much needed assistance to cities like Philadelphia that are working to prevent foreclosures before they occur,” said Philadelphia Mayor Michael Nutter. “Through the Philadelphia Mortgage Foreclosure Prevention Program we have reached out to families who are at risk of foreclosure and worked with them to help them stay in their homes. We have had great success, saving over 800 homes since last year, but additional investment would provide a great boost to our efforts.”
In July 2008, Congress passed and President Bush signed into law the Housing and Economic Recovery Act (HERA). The Neighborhood Stabilization Program was included as part of that bill to provide 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 Neighborhood Stabilization Program (NSP) provides grants to every state and certain local communities to purchase foreclosed or abandoned homes and to rehabilitate, resell or redevelop these homes in order to stabilize neighborhoods and stem the decline of house values of neighboring homes.
Title III of HERA allocated $4 billion in emergency assistance to state and local governments to use for the rehabilitation of abandoned and foreclosed properties in their jurisdictions. These funds were crucial to assist states and municipalities in acquiring and redeveloping abandoned and foreclosed properties that caused neighborhood blight, increased crime and lost tax revenue.
In the American Recovery and Reinvestment Act, Congress again recognized the value of the Neighborhood Stabilization Program Grants, or NSP Grants, by providing another $2 billion, this time in a competitive grant program
Predatory lending and the subprime mortgage crisis created a wave of foreclosures that has swept the country now since late 2006. Many communities fear a second wave that will result from the severe loss of jobs in the economic downturn and the loss of value in homes. Borrowers unable to make their monthly payments due to unemployment will not be able to refinance their homes, because they have plummeted in value as a result of the housing market meltdown. This amendment would offer more flexibility to grantees to use funds for this purpose. It would also allow states receiving the minimum allocation under NSP to use the funds to address statewide concerns.
