Senate Introduces Bill Proposing NSP3
Senator Bob Casey (D-PA) introduced the Homeowners' Relief and Neighborhood Stabilization Act of 2010 (S.2969) which among other provisions, proposes a third round of the Neighborhood Stabilization Program (NSP3). Already the House of Representatives passed the Wall Street Reform Protection Act of 2009 (H.R. 4173) which provided for $1 billion for NSP3.
The Homeowners’ Relief and Neighborhood Stabilization Act of 2010 would:
• Direct $3 billion in TARP funds to a program established at HUD called the Emergency Homeowners Relief Fund
• Allow homeowners facing a temporary loss in income due to unemployment, underemployment or medical condition to receive low-interest loans for up to 24 months to assist in their monthly mortgage payment. Homeowners must be at least 3 months behind on their mortgage payments and have received a notice stating that the holder of the mortgage intends to foreclose
• Instruct the HUD Secretary to take a homeowner’s ability to repay into account when establishing the terms, conditions and rates of the loan. Interest rates shall be fixed for the life of the loan and capped at FHA rates and prepayment penalties may not be assessed
• Provide $1 billion to the Neighborhood Stabilization Program, created in the Housing and Economic Recovery Act of 2008, to provide grants to state and local governments and eligible entities to purchase and redevelop foreclosed and abandoned homes and residential properties
Summary of Neighborhood Stabilization Program (NSP3) Provisions
The proposed third round of the Neighborhood Stabilization Program (NSP2) uses the NSP2 version of the program, as passed under the American Recovery and Reinvestment Act of 2009, but for the following changes:
- Funds may be expended until September 30, 2013.
- Waives the requirement that 50% of funds be expended in 2 years, 100% in 3 years.
- Waives the requirement that grantee use funds within 18 months of receipt.
- Prevents the Secretary from using up to 10% of funds for capacity building.
- Distributes funds based on the formula allocation of the Housing and Economic Recovery Act of 2008.
- Requires that the formula be established within 30 days of enactment.
- Waives the requirement that each state receive at least 0.5% of total funds.
- Establishes that no minimum grant size be established for states, but that a minimum grant size of $1 million be established for cities and counties receiving funds.
- Expands the definition of “state” to include DC, Puerto Rico, and territories.
- Prohibits the funding of organizations that have been convicted for a violation under Federal law relating to an election for Federal office.
SOURCE: National Foreclosure Prevention and Neighborhood Stabilization Task Force