Federal Foreclosure Aid Going Begging
How can it be that with foreclosures at record levels and the economy wobbling, state and local governments can’t spend $1 billion in federal foreclosure aid? This sorry truth comes as news circulates of skyrocketing foreclosures among the most creditworthy borrowers. Granted, a billion bucks is nothing these days, but it’s more than one quarter of the funds budgeted for HUD’s Neighborhood Stabilization Program (NSP).
- Nearly $4 billion in aid to stabilize housing in hard-hit areas
- Governments scrambling to put $1 billion to use before deadline
- Other foreclosure and mortgage relief programs still running
Time Running Out to Spend Federal Funds
Congress funded the NSP to let states and cities buy up abandoned and foreclosed properties. Congress hoped this would prop up housing values in areas hard hit by the credit crisis. It encouraged local governments to come up with creative ways to do this. States and cities could even use the funds to help private individuals buy homes to live in.
NSP’s shortfall should not surprise. Federal programs for mortgage and foreclosure assistance have had limited success. The ballyhooed mortgage modification program has had poor uptake and a high rate of re-defaults. The greatest federal impact on the housing market has been the role of the federal mortgage players Fannie Mae, Freddie Mac, and the FHA. They have kept the mortgage market from drying up altogether.
If you’re facing foreclosure, or thinking of buying a foreclosed property, there are still things you can do. The Making Home Affordable website explains the government sponsored modification, refinance, and short-sale assistance programs. And HUD’s NSP website offers a place to start for anyone interested in collaborating with local governments on purchasing foreclosed or abandoned property.
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