Localities, states scramble to spend foreclosure relief aidSubmitted by bobbyw24 on Thu, 07/29/2010 - 07:20
WASHINGTON — Local governments are at risk of
losing more than $1 billion in foreclosure relief
funds they can't spend quickly enough.
With use-it-or-lose-it spending deadlines weeks
away, cities and counties are scrambling to shore
up neighborhoods by buying foreclosed and
abandoned properties — but are often stymied by
market forces, federal regulations and a lack of
The $3.9 billion Neighborhood Stabilization
Program (NSP), passed in 2008, was intended to
help areas hardest hit by the housing crisis buy
foreclosed homes and residential properties. In
2009, Congress added $2 billion via the stimulus
bill. Last week, President Obama signed into law
another $1 billion for a third round of spending, for
a total of $6.9 billion.
The first $3.9 billion had to be used within 18
months of the states' grant agreements, which were
signed in March 2009. The deadlines have forced
some communities to shift their focus away from
single-family homes and toward multi-family or
rental housing to spend the money quickly and meet
low-income set-aside rules.
"The need for rentals is really quite high, as folks
continue to be foreclosed on," said Mercedes
Márquez, assistant secretary of the U.S. Department
of Housing and Urban Development. "It is the market
driving this. What the timeline has done is push p
eople to innovation."
She said the pace of spending has quickened, but
has made clear to local officials that there will be no
extensions, and unused funds will go to places that
need it more.
State-run programs are having the most trouble,
according to a USA TODAY analysis of HUD data,
though cities and counties have problems, too.
•In Texas, the state government was working with
about 55 local organizations to spend its $102
million. That structure has added a layer of
complexity, and the state is pulling back money
from some groups, mostly rural, that haven't been
able to spend it, said Tom Gouris, the state's deputy
executive director for housing programs. About $65
million is at risk. "We're very actively pursuing other
options to see that it gets utilized in Texas, and
doesn't go to another state," Gouris said.