Areas hardest hit by the nation's housing
crisis could get a
share of up to $1 billion in reallocated federal funds.
Housing and Urban Development Secretary Shaun Donovan said during a breakfast with reporters Tuesday that his department intends to create a new formula for allocating dollars from an existing program launched by the George W. Bush administration.
Funding in the Neighborhood Stabilization Program
shifted to communities hit hardest by foreclosures, vacancy rates,
values and unemployment during the recession, Donovan said.
The Bush administration spread funding more broadly, with each state government receiving a base allocation of $19.6 million, Donovan said.
The reallocation could offer big benefits to states
Nevada, California and Arizona that are among the hardest hit by the
crisis. Donovan said the reallocation could help Las Vegas more than any
The reallocated funding will be shifted from communities that haven't committed to projects.
The idea behind the program is to avoid blight.
Much of the
funding will be used to demolish or revamp vacant properties. Those
would then be sold to new buyers.
Funds would also be used to create “land banks” to assemble, temporarily manage and dispose of foreclosed homes, Donovan said.
Funds could also be used to help some homeowners
foreclosure, and to help prospective low- to middle-income homebuyers
down payment or closing costs.
“We want this to produce a quality product that will create demand,” Donovan said.
Under the program, 17,000 homes so far have been
renovated. HUD estimates that more than 63,000 homes will be demolished or
The Neighborhood Stabilization Program has received $6 billion in funding — $4 billion to improve housing and $2 billion in targeted stimulus funding, which was awarded in December, Donovan said.
Donovan said he intends to work with Congress to procure more funding for the housing program and new foreclosure counseling efforts. The Housing and Economic Recovery Act of 2008 provided $150 million for counseling to provide options for struggling homeowners.