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News Now

Washington
House backs bill ending foreclosure related program
WASHINGTON (3/17/11)—The Neighborhood Stabilization Program (NSP), a U.S. Department of Housing and Urban Development (HUD)program that helps local authorities purchase foreclosed or abandoned homes, would be ended under legislation that was approved by the House on Monday. The NSP provides grants to state and local governments to purchase foreclosed or abandoned homes to prevent neighboring homes from incurring significant losses in resale value. Nonprofits may also apply for the funds. The Obama administration earmarked $7 billion in funding for NSP. The NSP was enacted in 2008, and Congress has provided $6 billion in funds since then, according to the Congressional Budget Office (CBO). The CBO noted that the government would likely obligate $1 billion in funding over the next few months. The House legislation, if passed, would not go into effect until the summer. Therefore, current NSP funding would not be impacted, as the bill only cancels unobligated funds, the CBO said. Federal bank and thrift regulators last year expanded the scope of transactions that qualify for Community Reinvestment Act (CRA) rule consideration to encourage banks and thrifts to support eligible development activities in areas designated under the NSP. Following the House vote, HUD officials in a blog post said that the NSP has positively impacted property prices and turned "houses that would be abandoned back into homes for American families." "To cut off funding just as this program is taking root would be counterproductive," the blog post added. However, critics of the program, including House Financial Services COmmittee Chairman Spencer Bachus (R-Ala.)have said the program creates incentives for banks and other lender to foreclose on homeowners. Bachus has called the NSP "bad for struggling homeowners" and "horrible for taxpayers." "We simply cannot continue to use taxpayer dollars to bailout those who made bad decisions,” Bachus said. The legislation must move on to the Senate for consideration.


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