Neighborhood Stabilization Program (NSP) was a formula-allocated grant authorized by Congress under the Housing and Economic Recovery Act of 2008 (HERA). Eligible recipients included state and local governments.
NSP I: In 2008, New York City received an allocation of $24.3 million to acquire and rehabilitate foreclosed and abandoned single-family and multi-family residential properties in targeted neighborhoods. HPD has deployed its NSP I funds using two strategies: the Owner-Abandoned Strategy and the Real Estate Owned Program (REO). The Owner-Abandoned Strategy (25 percent of NSP funds) assisted with the acquisition and rehabilitation of multi-family buildings in foreclosure where the owner has abandoned the property. These units are part of HPD’s mandatory set-aside for households earning up to 50 percent of Area Median Income (AMI). The REO Program (75 percent of NSP funds) partially funded a credit facility established to facilitate acquisition and rehabilitation of REO homes by an affiliate of a local non-profit, Restored Homes (RH), with HPD oversight. RH was set up to perform a similar function for the U.S. Department of Housing and Urban Development (HUD) foreclosures in the Asset Control Area Program (ACA) and the Dollar Home Program. Using a combination of City, State, Federal and private funds, Restored Homes acquired and rehabilitated foreclosed homes and sold them at prices affordable to qualified homebuyers earning less than 120 percent of AMI.
NSP II: In 2009, through NSP II, New York City received a $20.1 million allocation of the federal funds from HUD with a plan centered on the acquisition and rehabilitation of 320 foreclosed units, as well as the redevelopment of 320 vacant sites. These efforts were to benefit homebuyers within very low- to moderate-income households, with 25 percent of the funds reserved for households with incomes up to 50 percent of Area Median Income (AMI). In addition to the award to HPD, two other New York City housing agencies received NSP funding in Round 2: Habitat for Humanity New York was awarded $10.5 million and Community Builders received an award of $5.5 million.
NSP III: NSP III was authorized under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The program provided an additional $1 billion in funding to the original NSP I program and similarly awarded formula-allocated funds based on distressed housing indicators in the 20 percent of census tracts most affected by foreclosures. For each State or local government, the formula was based on the number and percentage of home foreclosures, the number and percentage of homes financed by a subprime mortgages, and the number and percentage of homes in default or delinquency. HCR received an allocation of $5 million under NSP III, and HPD received an allocation of $9.8 million under NSP III, which the agency used to finance several existing troubled projects in the Bronx. HUD required that grant recipients expend 50 percent awarded funds within two years of receiving funds and spend all funds within three years.