HUD and the stabilizing neighborhoods

_IN April 2008__________________________________________________________________
President Nominates New Housing and Urban Development Secretary
Following the March resignation of Housing and Urban Development (HUD) Secretary
Alfonso Jackson, President Bush announced that Small Business Administration (SBA)
chief Steve Preston will be his nominee to take over as the new HUD Secretary.
During his tenure at SBA, Preston was responsible for revamping the agency's Disaster
Assistance Program, which provides loans to homeowners, renters, and businesses
after a disaster. Prior to his SBA appointment, Preston was executive vice president of the ServiceMaster Co. and had been a senior executive with First Data Corp. and
investment house Lehman Brothers.

Rep. Barney Frank (D-MA) and Sen. Chris Dodd (D-CT), chairs of the respective House and Senate HUD oversight committees, criticized HUD’s performance under Jackson. In talking about the current mortgage finance crisis, Frank said, “HUD has fallen far short of playing the constructive role that is required.” Dodd responded to the announcement of Preston with some skepticism, saying, “These [housing an foreclosure prevention] priorities call for a leader with expertise in housing issues, yet the President’s choice has no apparent housing background, which raises questions.”

Deputy HUD Secretary Roy Bernardi, a former Mayor of Syracuse, NY, has been
promoted to acting HUD Secretary until Preston or another nominee is confirmed.
(Michael Wallace, wallace@nlc.org, 202.626.3025)

ON September 26, 2008 on grant money to states and local communities to combat foreclosure.


PRESTON ALLOCATES NEARLY $4 BILLION TO STABILIZE NEIGHBORHOODS IN STATES AND LOCAL COMMUNITIES HARD-HIT BY FORECLOSURE
HUD plans housing summit to explain new Neighborhood Stabilization Program
WASHINGTON - U.S. Housing and Urban Development Secretary Steve Preston today allocated a total of $3.92 billion to all states and particularly hard-hit areas trying to respond to the effects of high foreclosures. HUD's new Neighborhood Stabilization Program (NSP) will provide targeted emergency assistance to state and local governments to acquire and redevelop foreclosed properties that might otherwise become sources of abandonment and blight within their communities.

HUD plans to host a national housing summit in Washington, DC on October 7-8, as well as a series of regional conferences to explain the details of this new program to governors, mayors, county executives and other State and local leaders.

"To those areas trying to recover from the effects of foreclosure and declining property values, help is on the way," said Preston. "Clearly, the intent is to put this money to work in communities with the highest need and to have a meaningful impact. Now the real work begins and HUD stands ready to support these States and communities as they work to stabilize their neighborhoods."

The funding is provided through HUD's Community Development Block Grant (CDBG) Program under the Housing and Economic Recovery Act of 2008. 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 and falling home values.

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.

In determining the allocations announced today, HUD followed Congress's direction that grants be targeted to areas based on the number/percent of foreclosures, subprime mortgages and mortgage defaults and delinquencies. HUD took a data driven approach to this process, relying on numerous data sets from government agencies and private sources.

HUD also will issue specific rules that will assist communities in the administration of this new program and to ensure, as Congress directed, that these grant funds be obligated for specific activities within 18 months. This Congressional timetable may present challenges to state and local governments undertaking ambitious, and in some cases unprecedented, acquisition and rehabilitation activities. Meanwhile, HUD is actively encouraging local governments receiving direct grants to coordinate with each other, and with their state governments, to make most effective use of available funds.

The NSP Program also seeks to prevent future foreclosures by requiring housing counseling for families receiving homebuyer assistance. In addition, the Agency seeks to protect future homebuyers by requiring States and local grantees to ensure that new homebuyers under this program obtain a mortgage loan from a lender who agrees to comply with sound lending practices.

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