NSP 3 and Homeowners’ Relief Fund Bill Introduced in Senate

On January 28, Senator Bob Casey (D-PA) introduced the Homeowners’ Relief and Neighborhood Stabilization Act of 2010, S. 2969.  The bill would provide $1 billion in funding for the Neighborhood Stabilization Program (NSP) for the redevelopment of foreclosed and abandoned properties as affordable housing and $3 billion for the Emergency Homeowners’ Relief Fund, a long-dormant HUD foreclosure prevention program that would provide emergency mortgage assistance relief to qualified homeowners.  The $4 billion would come from the Troubled Asset Relief Program (TARP).

The language in S. 2969 is identical to language contained in the Wall Street Reform and Consumer Protection Act of 2009, H.R. 4173, passed by the House in December.

According to the legislation, the $1 billion must be allocated by formula in accordance with the Housing and Economic Recovery Act of 2008 (HERA), which established NSP, and the formula must be established within 30 days of enactment.  For this round of NSP, the HUD Secretary may not establish a minimum grant size for grants to states, but a minimum grant amount, not to exceed $1 million, may be established for grants to units of general local governments.  The definition of state is expanded to include the District of Columbia, Puerto Rico, the Virgin Islands, and insular areas.

Each grantee would be required to establish procedures to create preferences for the development of affordable rental housing.  Funds would need to be expended by September 30, 2013.

Under S. 2969, NSP 2 program rules, as outlined in the American Recovery and Reinvestment Act of 2009 (ARRA), would apply to the additional $1 billion, with some changes.

The bill would also reauthorize HUD’s Emergency Homeowners’ Relief Fund.  Under the bill, HUD may allow states with equivalent programs to administer that state’s share of the new funds.  The Relief Fund assists homeowners who have received notice that their mortgagee intends to foreclose.  To qualify, the mortgagor must:  be at least three months delinquent, have incurred a loss of income due to involuntary unemployment or underemployment and be financially unable to make full mortgage payments, and have a reasonable prospect of resuming their mortgage payments.  The property must be the mortgagor’s principal residence and relief payments can be made for up to 12 months with an option to extend payments for up to an additional 12 months.

S. 2969 has been referred to Senate Committee on Banking, Housing, and Urban Affairs.