States Should Have More Flexibility To Allocate Funds Under Neighborhood Stabilization Program

Leahy And Other Senators Introduce Bipartisan Amendment To The Stimulus Bill

WASHINGTON, DC (Thursday, Feb. 5, 2009) - Senators Patrick Leahy (D-VT), Bob Casey (D-PA), Arlen Specter (R-PA), Chris Dodd (D-CT), Charles Schumer (D-NY) and John Kerry (D-MA) introduced a bipartisan 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).

“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.

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.


“People who lose their homes can hardly be expected to help stimulate the economy to a recovery.  And the mortgage relief provisions won't work well without availability of legal advice to mortgage holders,” said Thomas M. Susman, Director, Governmental Affairs Office American Bar Association.


This amendment will allow grantees more flexibility in using the funds by

  • Permitting up to 10% of funds to be used for foreclosure prevention activities, to be defined by HUD
  • Allowing states receiving the minimum allocation under NSP to use the funds to address statewide concerns
  • Setting aside $30 million for legal assistance for low- and moderate-income homeowners or tenants related to homeownership preservation, home foreclosure prevention, and tenancy associated with home foreclosure.

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