Administration proposes changes to Neighborhood Stabilization Program, including additional funding

In a press release Tuesday the Obama administration discussed plans to reallocate funds from the first round of the Neighborhood Stabilization Program (NSP1) and proposed a new third round of funding (NSP3).

The release states: The Administration also announced plans to reallocate funds awarded through NSP1 that have not yet been committed to specific projects, in order to drive more funding to hardest hit communities

Texas will likely be negatively impacted by a reallocation of uncommitted NSP1 funds, as NSP1 recipients in Texas lag the national commitment rate in the program (see the chart below)


As discussed here before, one contributing factor to the delay in the commitment of funds has been a standoff between lenders and recipients regarding the Protecting Tenants at Foreclosure Act (PTAF).  Lenders refused to certify that they were following the requirements of that law, and Texas recipients, rightly so, refused to purchase properties that could not be documented as complaint with PTAF.

While we’ve been told by TDHCA that the PTAF certification issue has been resolved with most lenders, it clearly delayed this program.  If HUD develops rules to reallocate NSP1 funds, this issue needs to be addressed: Texas should not be punished for having required lenders to follow the law.

The press release also proposes an additional round of funding: Through HUD’s recapture process, the Administration is working to use the resources we have already received and build on the success and lessons from NSP1 and NSP2, ideally with additional funding for a third round, to really target the recovery in hard hit areas directly,” said HUD Secretary Shaun Donovan.

We’ll be looking at NSP1 and NSP2 in Texas in more detail over the coming weeks, with an eye towards articulating the “lessons” from those programs.

Stay tuned.

1 Comment

  1. I certainly hope that the analysis looks at more than the PTAF issue. From our perspective the State’s lack of response and snails pace in executing contract, drafting documents, getting environmental reviews right and getting loans closed are the biggest hurdle in Texas.

    Try talking to the contract administrators that are suffering through the state’s incredibly slow and process.


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