Legal Alerts

In July of this year, Congress passed the Housing and Economic Recovery Act of 2008, which included an allocation of $3.9 billion dollars in funds to cities, counties and states for the purchase and redevelopment of foreclosed housing to stabilize local neighborhoods.  Last month, the U.S. Department of Housing and Urban Development (HUD) announced its allocation list and program requirements.  Several California cities, including the Cities of Ontario, Fontana, Corona and Riverside, were allocated funds directly from HUD to implement programs for the purchase and rehabilitation of foreclosed homes.  For a complete list of direct NSP allocations for California communities, please click here.  Table

For cities that did not receive direct HUD allocations, HUD has also made available $145 million dollars to the State of California for use in other communities with high foreclosure rates.  With careful planning and implementation, the use of these “Neighborhood Stabilization Program” (NSP) funds, in combination with other city, redevelopment and housing resources, can be a significant tool in fighting blight caused by the tremendous number of foreclosures affecting California communities. 

For example, under HUD’s program requirements, local governments can use NSP funds to:

• Establish financing mechanisms for the purchase and redevelopment of foreclosed homes (e.g. downpayment and closing cost assistance, soft-second loans, loan loss reserves, and shared equity loans for low- and moderate-income homebuyers);
• Purchase and rehabilitate foreclosed homes in order to sell, rent or redevelop these homes;
• Establish land banks of foreclosed homes; and
• Demolish blighted structures and redevelop demolished or vacant properties.

California communities wishing to access the California NSP funds will have to make applications directly to the California Department of Housing and Community Development (HCD).  HCD will post its proposed allocation list on its website on November 14, 2008.  Cities wishing to participate in the California NSP should take steps to begin to prepare now, while keeping track of all pre-award costs.  Pre-award costs and administrative and legal costs (up to 10% of the award) are permitted costs under HUD’s program rules.  For a complete description of the HUD and HCD program requirements please click here.  Memo

To learn more about Neighborhood Stabilization Program activities and ways in which your city or agency can prepare itself for the funding availability program requirements, please contact one of the following Best Best & Krieger attorneys:

Marco A. Martinez       (949) 263-6582

Roxanne Moin             (949) 263-6572

Haviva Shane              (909) 483-6645

Lena Wade                 (760) 837-1615
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Disclaimer: BB&K eBulletins are not intended as legal advice. Additional facts or future developments may affect subjects contained herein. Seek the advice of an attorney before acting or relying upon any information in this communiqué. ©2008 Best Best & Krieger LLP