HUD Announces NSP Revisions

On Thursday, April 1, the U.S. Department of Housing and Urban Development (HUD) announced important changes to the Neighborhood Stabilization Program (NSP) in an effort to increase the flexibility of funds for purchasing and rehabilitating foreclosed and abandoned properties. HUD has redefined the terms “foreclosed” to now include properties in default; and the term “abandoned” will now include homes with code violations. The new changes will help communities acquire, rehabilitate and redevelopment of foreclosed and abandoned properties under the NSP program as well as provide relief to prospective grantees in meeting the 18-month deadline. Specifically, the definitions of the terms “foreclosed” and “abandoned” properties have broadened to include:

New "Foreclosed" definition:
Originally, HUD defined the term “foreclosed” as limited to properties where the foreclosure process was completed. Under the new definition, properties will be eligible for NSP assistance if any of the following conditions apply: The property is at least 60 days delinquent on its mortgage and the owner has been notified; or the property owner is 90 days or more delinquent on tax payments; or under state or local law, foreclosure proceedings have been initiated or completed; or foreclosure proceedings have been completed and title has been transferred to an intermediary aggregator or servicer that is not an NSP grantee, subrecipient, developer, or end user. This change will allow the purchase of homes through a “short sale.”

New "Abandoned" Definition:
HUD previously defined “abandoned” as a property that is foreclosed and vacant for 90 days. The new definition of “abandoned” has been expanded to include homes where no mortgage or tax payments have been made by the property owner for at least 90 days or a code enforcement inspection has determined that the property is not habitable and the owner has taken no corrective actions within 90 days of notification of the deficiencies.