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Authorized by the Housing and Economic Recovery Act of 2008 (HERA), the Neighborhood Stabilization Program (NSP) provides emergency funding in grants to states and localities to aid in the purchasing, rehabilitating, redeveloping, and reselling of foreclosed or abandoned homes to stabilize neighborhoods and stem the decline of the property values of neighboring homes.

NSP received $3.92 billion in 2008 that was allocated by formula to states and local governments. Congress provided an additional $2 billion for NSP in the economic stimulus bill enacted in 2009, which HUD will allocate competitively to states, local governments, nonprofits, and others. NSP is run much like the Community Development Block Grant program (CDBG). NSP funds may be used to establish financing mechanisms for the purchase and redevelopment of foreclosed homes and residential properties, to purchase and rehabilitate abandoned or foreclosed homes and residential properties, to establish land banks for foreclosed homes, to demolish blighted structures, and to redevelop demolished or vacant properties.  

All activities funded by NSP must benefit low- and moderate-income persons whose incomes do not exceed 120 percent of area median income (AMI). In addition, NSP grantees must use at least 25 percent of the funds appropriated for the purchase and redevelopment of abandoned or foreclosed homes or residential properties that will be used to house individuals or families whose incomes do not exceed 50 percent of AMI.
 
Useful Link: HUD’s Neighborhood Stabilization Program Resource Exchange