NSP Funds Do Not Benefit Listings of Bank Owned Homes
Arizona received about $121 million federal funds under the Neighborhood Stabilization Program (NSP) in April. And the largest share of the funds went to the city of Phoenix which received about $39.4 million.
However, two months after the receipt of the fund, Phoenix has yet to purchase a single property on listings of bank owned homes using the NSP federal funds.
The NSP federal program is designed to help communities severely affected by abandoned, vacant and foreclosed properties. Under the program, individuals and families who qualify may avail of a loan for a maximum of $15,000 to pay for deposit and closings costs of properties on listings of bank owned homes.
The NSP was approved in July last year by the U.S. Congress. Following the approval was the release of $3.2 billion into communities hardest hit by the foreclosure crisis. An additional $2 billion was allocated for the program in May.
The main goal of the NSP is to stabilize and strengthen the housing market decimated by the economic and foreclosure crisis.
Arizona ranked fourth in states with high foreclosure rates in May and industry experts were hoping that the NSP funding would make a big difference in the state’s fight to prevent continuing increase in the number of properties on listings of bank owned homes.
However, most homeowners eligible for the NSP funds are still trying to overcome the hurdles of the unfamiliar process.
The program is offered only for homeowners with income of between $55,350 and $104,400, according to the Department of Housing and Urban Development (HUD), adding that the income restrictions vary from one region to another.
To be eligible, applicants must undergo and complete financial counseling and financial courses in home ownership and budgeting and invest $1,000 from their personal funds.
Under the program, the HUD requires lending institutions to give 15 percent discount to homebuyers. Furthermore, loans must be paid in full when homeowners refinance or sell the properties. However, lending institutions are not required to accept a reduced or discounted offer.
Meanwhile, industry experts warned that the NSP is not enough to contain the number of properties on listings of bank owned homes in Phoenix, adding that there is a need to find other solutions that can help stabilize communities hardest hit by the foreclosure crisis.
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