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September 8, 2010
OBAMA ADMINISTRATION AWARDS ADDITIONAL $5 MILLION TO STABILIZE OREGON NEIGHBORHOODS HARD-HIT BY BLIGHT FORECLOSURE
More than 40 Oregon communities already have used prior NSP awards to acquire more than 350 properties for rehab and re-sale
PORTLAND - U.S. Housing and Urban Development Secretary Shaun Donovan today awarded an additional $5 million
in funding to Oregon communities struggling to reverse the effects of the foreclosure crisis. The grants announced today represent a third round of funding through HUD's Neighborhood Stabilization Program (NSP) and will provide targeted emergency assistance to help local communities in Oregon acquire, redevelop or demolish foreclosed properties.
The $5 million in NSP III funds awarded today are a result of the Wall Street Reform Consumer Protection Act of
2010 sponsored by U.S. Senator Christopher Dodd and U.S. Representative Barney Frank and is over and above the $19.6 million in NSP I funds awarded to Oregon Housing Community Services under the Housing Economic Recovery Act of 2008 and the $6.8 million in NSP II funds it won competitively under the American Recovery Reinvestment Act of 2009.
To date, using NSP I funds Oregon Housing Community Services and its sub-grantees are in the process of
purchasing 351 foreclosed or blighted housings and redeveloping them for re-sale in more than 45 Oregon
communities including Albany, Bend, Eugene, Grants Pass, Gresham, Klamath Falls, Portland, Redmond, Roseburg, Salem and Springfield.
"These grants will build on local efforts to reverse the effects these foreclosed properties have on their surrounding neighborhoods," said Donovan. "We wanted to make certain that we targeted these funds to those places with especially high foreclosure activity so we can help turn the tide in our battle against abandonment and blight. This investment will reduce blight, bolster neighboring home values, create jobs and produce affordable housing."
"A blighted or foreclosed house in an otherwise vibrant neighborhood can all too quickly change the quality of life for those who call it home," said HUD Regional Administrator McBride. "Our NSP funds are giving Oregon communities the resources to move effectively to halt the downward trend in its tracks and to keep their neighborhoods strong."
"Most Oregon communities quickly used all the available NSP 1 resources," said Victor Merced, director of Oregon Housing and Community Services. "These new resources will help them respond to the problem of vacant homes and provide an opportunity to create more affordable housing opportunities across the state."
The funding announced today is provided under the Dodd-Frank Wall Street Reform and Consumer Protection Act.
To date, there have been two other rounds of NSP funding: the Housing and Economic Recovery Act of 2008 (HERA) appropriated $3.92 billion and the American Recovery and Reinvestment Act of 2009 (Recovery Act)appropriated an additional $2 billion. Like those earlier rounds of NSP grants, 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, abandoned homes, and falling home values. Today, 92 cents of every dollar from the first round of NSP funding is obligated – and is in use by communities, buying up and renovating homes, and creating jobs.
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. HUD will issue an NSP3 guidance notice in the next few weeks to assist grantees in designing their programs and applying for funds.
HUD's NSP Program also seeks to prevent future foreclosures by requiring housing counseling for families receiving homebuyer assistance. The Agency seeks to protect future homebuyers by requiring States and local grantees to ensure that new homebuyers under this program receive homeownership counseling and obtain a mortgage loan from
a lender who agrees to comply with sound lending practices.
In determining the allocations announced today, and similar to NSP1, HUD followed key indicators for the distribution formula outlined by Congress. HUD is using the latest data to implement the Congressional formula. The formula
weighs several factors to match funding to need in the 20 percent most distressed neighborhoods as determined based on the number and percentage of home foreclosures, the number and percentage of homes financed by a subprime mortgage related loan, and the number and percentage of homes in delinquency. To estimate the statutory factors to the neighborhood level, HUD uses a model that takes into account causes of foreclosures and delinquencies, which include housing price declines from peak levels, and increases in unemployment, and rate of
high cost and highly leveraged loans. HUD also considers vacancy problems in neighborhoods with severe foreclosure related problems.
In addition to a third round of NSP funding, Dodd-Frank Wall Street Reform and Consumer Protection Act creates
a $1 billion Emergency Homeowners Loan Program to be administered by HUD. This loan program will provide up to 24 months in mortgage assistance to homeowners who are at risk of foreclosure and have experienced a substantial reduction in income due to involuntary unemployment, underemployment, or a medical condition. HUD will announce additional details, including the targeted communities and other program specifics when the program is officially launched in the coming weeks.
HUD is the nation's housing agency committed to sustaining homeownership; 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.