By Eugene T. Lowe
September 20, 2010

Housing and Urban Development (HUD) Secretary Shaun Donovan announced the allocations of the third round of Neighborhood Stabilization Program (NSP) funds on September 8. An additional $1 billion was provided for NSP under the Dodd-Frank Wall Street Reform and Consumer Protection Act. As in the first two funding rounds of the NSP program, local and state governments will receive targeted emergency assistance to acquire, redevelop, and demolish foreclosed properties.

The latest round of NSP funding brings total program funding to $6.92 billion. The first round of $3.92 billion was provided under the Housing and Economic Recovery Act of 2008 (HERA) and the second round of $2 billion came through the American Recovery and Reinvestment Act of 2009 (Recovery Act). HUD reports that, "95 percent 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."

NSP3 funds, as in the two preceding rounds, can be used to acquire land and property, to demolish or rehabilitate abandoned properties, and/or to offer down payment and closing cost assistance to low- to moderate-income homebuyers (those households whose income does not exceed 120 percent of area median income). Communities can also create land banks for the purpose of stabilizing neighborhoods.

NSP grantees (all rounds) will also be able to participate in the First Look Partnership with the National Community Stabilization Trust announced by HUD Secretary Donovan on September 1. First Look will give NSP grantees the exclusive opportunity (12 -14 day window) to purchase bank-owned properties in certain neighborhoods so these homes could be rehabilitated, rented, resold or demolished. NSP grantees will be immediately notified when properties are available and be able to purchase the properties at a discounted rate of their appraised value, acquiring the properties with NSP funds for any eligible use.

NSP3 is distributed through formula allocation, as was NSP1. The formula factors were outlined by Congress and HUD use the latest data to determine the distribution. NSP2 was distributed based on competition. For more information on NSP3, please see HUD's website at: http://portal.hud.gov/portal/page/portal/HUD/press/press_releases_media_advisories/2010/HUDNo.10-189. And for more information on the First Look Program, see HUD's website at: http://portal.hud.gov/portal/page/portal/HUD/press/press_releases_media_advisories/2010/HUDNo.10-187.