MORE ABOUT NSP -
NSP Guide (03/05/09)
This overview of the NSP program was taken directly from a HUD document, "Policy Guideance on NSP-Supported Homeownership: Affordability, Financial Structure and Program Income," the purpose of which was to explain the objectives of the Neighborhood Stabilization Program, how it works, and to clarify issues with other HUD Programs that are related to NSP activities. These subjects include initial affordability, continued affordability, financial structures, and program income. Definitions are provided, as well as examples, to reduce potential confusion for grantees. The original document is here.
Rehabilitation Standards
HUD has posted clear standards for what is expected of NSP-funded homes. Note the quote below from following legislation:
Requirements for Emergency Assistance for Redevelopment of Abandoned and Foreclosed Homes Grantees Under the Housing and Economic Recovery Act, 2008
(Federal Register, Vol. 73, No. 194, page 58338 - Monday, October 6, 2008)
Here is HUD's simple, graphical OVERVIEW of purpose and operation of the Neighborhood Stabilization Program works.
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Congress established the NSP to stabilize neighborhoods by addressing problems created by the abandonment and foreclosure of homes and residential properties. NSP funds are allocated to the grantee—a city, urban county, or state. |
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The grantee acquires foreclosed or abandoned homes directly, or through subrecipients or private parties. If necessary, the grantee can also arrange for rehabilitation to local standards. |
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A family with income that qualifies for NSP wishes to buy the home. The family applies for NSP assistance from the grantee. The home will be the family's principal place of residence. |
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The grantee reviews income documentation for the family and calculates an “affordable rent” (or mortgage payment) for the home. In many cases, this will require a subsidy in the form of a reduced sales price, downpayment assistance, and/or a second mortgage at favorable terms in order to make the transaction initially affordable for the family. |
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The amount of the subsidy to make the house affordable initially (above) becomes the basis for determining “continued affordability”. Based on HOME Program or stricter standards, the grantee requires the house to remain affordable for 5, 10, 15, or more years. The grantee places a lien or covenant on the house to enforce this requirement. |
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When the family sells the house, the grantee determines whether the period of continued affordability is completed. If the affordability terms have been met, the family owes no more money and may sell the house free of NSP conditions. If the affordability terms have not been met, the grantee may recapture some or all of the subsidy funds or require that the house be resold to an income-eligible family. |
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If any funds are returned to the grantee at sale, these funds are considered Program Income to the NSP and must be used for NSP-eligible activities in accordance with CDBG Program Income procedures. |
NSP Guide (03/05/09)This overview of the NSP program was taken directly from a HUD document, "Policy Guideance on NSP-Supported Homeownership: Affordability, Financial Structure and Program Income," the purpose of which was to explain the objectives of the Neighborhood Stabilization Program, how it works, and to clarify issues with other HUD Programs that are related to NSP activities. These subjects include initial affordability, continued affordability, financial structures, and program income. Definitions are provided, as well as examples, to reduce potential confusion for grantees. The original document is here.
Rehabilitation Standards
HUD has posted clear standards for what is expected of NSP-funded homes. Note the quote below from following legislation:
Requirements for Emergency Assistance for Redevelopment of Abandoned and Foreclosed Homes Grantees Under the Housing and Economic Recovery Act, 2008(Federal Register, Vol. 73, No. 194, page 58338 - Monday, October 6, 2008)
HERA provides that any NSP-assisted rehabilitation of a foreclosed-upon home or residential property shall be to the extent necessary to comply with applicable laws, codes, and other requirements relating to housing safety, quality, and habitability, in order to sell, rent, or redevelop such homes and properties. This imposes a requirement that does not exist in the CDBG program. This means that each grantee must describe or reference in its NSP action plan amendment what rehabilitation standards it will apply for NSP-assisted rehabilitation. HUD will monitor to ensure the standards are implemented.
HERA defines rehabilitation to include improvements to increase the energy efficiency or conservation of such homes and properties or to provide a renewable energy source or sources for such homes and properties. Such improvements are also eligible under the regular CDBG program. HUD strongly encourages grantees to use NSP funds not only to stabilize neighborhoods in the short-term, but to strategically incorporate modern, green building and energy-efficiency improvements in all NSP activities to provide for long-term affordability and increased sustainability and attractiveness of housing.
