By Eugene T. Lowe
July 13, 2009

The Chairman of the House Financial Services Committee Representative Barney Frank (MA) has introduced the TARP for Main Street Bill, H.R. 3068, which would fund a third round of the Neighborhood Stabilization Program (NSP3). Also included in the legislation is funding for the National Affordable Housing Trust Fund, and funding for the emergency mortgage relief and assistance for troubled multifamily properties. These programs would be paid from the dividends of the Troubled Asset Relief Program (TARP).

According to the Government Accounting Office that has the responsibility to report on TARP (authorized in the Emergency Economic Stabilization Act of 2008) as of June 30, 2009, “Treasury had disbursed $339 billion in TARP funds” and had “received approximately $6.7 billion in dividend payments on preferred stock acquired through the Capital Purchase Program (CPP), Targeted Investment Program (TIP), Automotive Industry Financing Program (AIFP), and Asset Guarantee Program (AGP). “

From the TARP dividends, NSP3 would receive $1.5 billion; the Housing Trust Fund, $1 billon; the Emergency Homeowners’ Relief Fund, $2 billion; and, the Multifamily Relief Program, $2 billion. NSP3 as NSP1 (established by the Housing and Economic Recovery Act of 2008) would be distributed by formula. NSP2, established by the American Recovery and Reinvestment Act of 2009 (ARRA), is competitive and open to governmental entities and nonprofits. While distributed by formula, there would be differences between NSP3 and NSP1. For example, in NSP1, the HUD Secretary was allowed to establish a minimum grant amount or size for grants to states (which resulted in several states receiving funds that were not needed and could not be used). But in NSP3, there is no minimum grant size for states, which will make it possible for more local governments to receive grants.

In prepared testimony before the Financial Services Committee on July 9, Chris Warren, Chief of Regional Development for Cleveland, said on behalf of Cleveland Mayor Frank Jackson, "The TARP for Main Street Act of 2009 will unequivocally advance our efforts to recover in Cleveland and Cuyahoga County. The Housing Trust Fund and Multi-Family provisions will undergird our efforts to reclaim troubled properties and produce safe affordable housing. The Emergency Mortgage Relief Fund will help thousands of borrowers stay in their homes and avoid the blight and costs of abandonment. And, support for a third round of Neighborhood Stabilization Program will advance Cleveland and Cuyahoga County’s sensible homegrown recovery program.”