By Eugene T. Lowe
March 28, 2011

The U.S. House of Representatives voted 242-182 on March 17 to terminate the third round of the Neighborhood Stabilization Program (NSP). The total funding for NSP is $7 billion, which includes $4 billion for the first round of the program, $2 billion for the second round (included in the Recovery Act), and $1 billion for round three (approved in the Dodd-Frank Wall Street Reform Act). The legislation in the House passed bill (H.R. 861) would rescind and cancel all unobligated or uncommitted funds remaining in the third round.

Representative Judy Biggert (IL), Chair of the House Subcommittee on Insurance, Housing and Community Opportunity, introduced the NSP termination legislation and three other Obama Administration programs that address the mortgage foreclosure crisis: the Home Affordable Modification Program (HAMP); the FHA refinance program and HUD’s emergency homeowner assistance program. Last week, the House approved ending the FHA refinance program (H.R. 830) and the HUD emergency homeowner assistance program (H.R. 836).

The U.S. Conference of Mayors and several other national organizations representing locally elected and appointed officials in a letter to Representative Biggert strongly supported all three rounds of NSP. The letter said: “The collapse of the housing market in 2008 wreaked havoc on neighborhoods across America; foreclosures were rampant and abandoned homes dotted both urban and rural landscapes. The national crisis threatened to bring down local economies. Congress stepped in to provide funding for NSP1 – the first round of funding under the Neighborhood Stabilization Program – to abate the crisis. The funding was quickly followed by NSP2 and NSP3 to further aid local neighborhoods. While more funding is needed, the contributions these programs have made have been important to abating the foreclosure crisis and arresting neighborhood decline. NSP3 is needed to continue the reverberating effect of the activities started under NSP1 and NSP2.

The leadership of the Senate does not plan to consider the NSP legislation passed in the House or any of the other measures that would eliminate mortgage foreclosure programs. President Obama also says that he would veto any such legislation that comes to his desk. Senator Jim DeMint (SC) in response has introduced S. 527 that is a companion measure to H.R. 839 that would eliminate the Home Affordable Modification (HAMP) program. It is believed that Senator DeMint’s bill is intended to keep attention focused on the need to cut the budget.