Alaskans Get Money for Foreclosures
For Immediate Release:
Wednesday, September 8, 2010
Alaska News UpDate
OBAMA ADMINISTRATION AWARDS ADDITIONAL $5 MILLION
TO STABILIZE ALASKA NEIGHBORHOODS HARD-HIT
BY BLIGHT & FORECLOSURE
Alaska communities have used earlier NSP awards to develop 247 units of new or rehabbed housing
ANCHORAGE – U.S. Housing and Urban Development Secretary Shaun Donovan, U.S.. Senator Mark Begich and HUD Northwest Regional Administrator Mary McBride today announced the award of an additional $5 million in funding to Alaska communities struggling to reverse the effects of the foreclosure crisis. The grants announced today represent the third round of funding of HUD’s Neighborhood Stabilization Program (NSP) and will provide targeted assistance to help communities in Alaska acquire and demolish or redevelop and re-sell blighted and foreclosed properties.
The $5 million in NSP III funds awarded today are a result of the Wall Street Reform & Consumer Protection Act of 2010 sponsored by U.S. Senator Christopher Dodd and U.S. Representative Barney Frank and is over and above the $19.6 million in NSP I funds awarded to Alaska under the Housing & Economic Recovery Act of 2008. To date, using NSP I funds the Alaska Housing Finance Corporation and its sub-grantees are in the process of purchasing houses, vacant lots or apartment units to produce 247 units of new or rehabilitated housing in Anchorage, Fairbanks, Juneau, Wasilla and the Kenai Peninsula.
“These grants will build on local efforts to reverse the effects these foreclosed properties have on their surrounding neighborhoods,” said Donovan. “We wanted to make certain that we targeted these funds to those places with especially high foreclosure activity so we can help turn the tide in our battle against abandonment and blight. This investment will reduce blight, bolster neighboring home values, create jobs and produce affordable housing.”
“A foreclosed house, blighted apartment building or weed-strewn, vacant lot in an otherwise vibrant neighborhood can all too quickly change the quality of life for those who call it home,” said HUD Regional Administrator McBride. “Our NSP funds are giving Alaska communities the resources to move effectively to halt the downward trend in its tracks and to keep their neighborhoods strong.”
“These dollars are an excellent investment in the Alaska economy, giving Alaskans the opportunity for affordable homeownership while preventing neighborhood decline and deterring family homelessness,” Sen. Begich said. “I was pleased to support the Wall Street reform bill which provides a number of consumer protection items including funding for programs to keep our neighborhoods strong and vibrant.”
“Due to the hard work of the NSP Grantees around the state and AHFC staff,” said Alaska Housing Finance Corporation Chief Executive Officer and Executive Director Dan Fauste in acknowledging the success of NSP in Alaska, “this program is providing much-needed affordable housing in Alaska, creating jobs and improving neighborhoods.”
The funding announced today is provided under the Dodd-Frank Wall Street Reform and Consumer Protection Act. To date, there have been two other rounds of NSP funding: the Housing and Economic Recovery Act of 2008 (HERA) appropriated $3.92 billion and the American Recovery and Reinvestment Act of 2009 (Recovery Act) appropriated an additional $2 billion. Like those earlier rounds of NSP grants, these targeted funds will be used to purchase foreclosed homes at a discount and to rehabilitate or redevelop them in order to respond to rising foreclosures, abandoned homes, and falling home values. Today, 92 cents 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.
State and local governments can use their neighborhood stabilization grants to acquire land and property; to demolish or rehabilitate abandoned properties; and/or to offer downpayment and closing cost assistance to low- to moderate-income homebuyers (household incomes not exceed 120 percent of area median income). In addition, these grantees can create “land banks” to assemble, temporarily manage, and dispose of vacant land for the purpose of stabilizing neighborhoods and encouraging re-use or redevelopment of urban property. HUD will issue an NSP3 guidance notice in the next few weeks to assist grantees in designing their programs and applying for funds.
HUD’s NSP Program also seeks to prevent future foreclosures by requiring housing counseling for families receiving homebuyer assistance. The Agency seeks to protect future homebuyers by requiring States and local grantees to ensure that new homebuyers under this program receive homeownership counseling and obtain a mortgage loan from a lender who agrees to comply with sound lending practices.
In determining the allocations announced today, and similar to NSP1, HUD followed key indicators for the distribution formula outlined by Congress. HUD is using the latest data to implement the Congressional formula. The formula weighs several factors to match funding to need in the 20 percent most distressed neighborhoods as determined based on the number and percentage of home foreclosures, the number and percentage of homes financed by a subprime mortgage related loan, and the number and percentage of homes in delinquency. To estimate the statutory factors to the neighborhood level, HUD uses a model that takes into account causes of foreclosures and delinquencies, which include housing price declines from peak levels, and increases in unemployment, and rate of high cost and highly leveraged loans. HUD also considers vacancy problems in neighborhoods with severe foreclosure related problems.
In addition to a third round of NSP funding, Dodd-Frank Wall Street Reform and Consumer Protection Act creates a $1 billion Emergency Homeowners Loan Program to be administered by HUD. This loan program will provide up to 24 months in mortgage assistance to homeowners who are at risk of foreclosure and have experienced a substantial reduction in income due to involuntary unemployment, underemployment, or a medical condition. HUD will announce additional details, including the targeted communities and other program specifics when the program is officially launched in the coming weeks.
HUD’s mission is to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD is working to strengthen the housing market to bolster the economy and protect consumers; meet the need for quality affordable rental homes: utilize housing as a platform for improving quality of life; build inclusive and sustainable communities free from discrimination; and transform the way HUD does business. More information about HUD and its programs is available on the Internet at www.hud.gov and espanol.hud.gov.