House votes to end last round of NSP

The House of Representatives voted Wednesday to cut the last $1 billion from the Neighborhood Stabilization Program. In July 2008, the Housing and Economic Recovery Act cleared the Department of Housing and Urban Development to grant $3.9 billion through the first round of NSP. The American Recovery and Reinvestment Act of 2009 provided another $2 billion through NSP2, and the Dodd-Frank Act in July 2010 cleared another $1 billion through NSP3. Grantees can use the money to rehab vacant residential properties and resell them, giving owner-occupants up to two weeks to evaluate and bid on the properties ahead of investors. This “First Look” program will cut the REO process, which takes between 75 and 85 days in half. This is the third program that House Republicans voted to end in the past two weeks. Lawmakers cleared a bill ending the Federal Housing Administration‘s Short Refi program and another terminating HUD’s program to provide mortgage assistance to the unemployed. A bill ending the Treasury Department‘s Home Affordable Modification Program is scheduled to reach the floor on the week of March 28. Rep. Gary Miller (R-Calif.) pointed out that grantees were found to be mishandling some of the funds in earlier rounds of NSP and that he would have supported a program that required the money to be paid back to the federal government. “We did not stop a foreclosure,” Miller said. “They do not have to pay it back. (Grantees) can sell those houses to whomever they want to as long as it is less than what they paid for it.” Rep. Barney Frank (D-Mass.) said NSP is not a foreclosure prevention program but rather an initiative to clear out abandoned property with no known owner behind it. “This is not only about foreclosed property. This is about foreclosed and abandoned property,” Frank said. “There is a demonstrable amount of properties in these cities that cannot be traced. Somebody has to demolish property where there is no owner. Those bulldozers cost money. The person driving the bulldozer costs money.” HUD released a statement after the bill was passed, reiterating that the program has made progress. “The Neighborhood Stabilization Program is investing in hard-hit communities struggling to reverse the effects of the foreclosure crisis,” the statement read. “Across the country, this program is already positively impacting property prices and turning houses that would be abandoned back into homes for American families. We cannot afford to turn back the progress we’ve made in these neighborhoods. To cut off funding just as this program is taking root would be counterproductive.” While Frank said the remaining $1 billion should be taken from the largest financial institutions and hedge funds to rehab properties through the NSP, Republicans added an amendment that would repurpose the $1 billion to pay down the U.S. deficit. “It’s not time to amend and pretend. It’s time to end,” Miller said. Still, sources in the Senate have said the bills ending these programs will be “dead on arrival.” The Obama administration has also said it will veto the bills should they reach the president’s desk.  Write to Jon Prior. Follow him on Twitter: @JonAPrior