Neighborhood

Stabilization

Program

NSP Overview

NSP was created through the

Housing and Economic Recovery

Act of 2008 (HERA)

Amended through the American

Recovery and Reinvestment Act of

2009 (ARRA)

Initially funded with $3.92 billion

(NSP 1)

$2 billion of additional funds

provided through ARRA (NSP 2)

Five Eligible Activities

Establish financing mechanisms for the purchase and redevelopment of foreclosed upon homes and residential properties

Purchase and rehabilitate homes and residential properties that have been abandoned or foreclosed upon

Establish land banks for homes that have been foreclosed upon

Demolish blighted structures

Redevelop demolished or vacant properties

Some Key Provisions

NSP funds can only be used in connection with housing-

-not commercial properties or public facilities

Income Targeting--NSP funds must be used to benefit

families whose income does not exceed 120% of area

median income. Additionally, 25% of all NSP funds (30%

in North Carolina) must be used to benefit families

whose income does not exceed 50% of AMI

Some Key Provisions - continued

Purchase Discount - foreclosed-upon properties purchased with NSP funds must be acquired at a discount to current market-appraised value. Current regulations provide that the discount should generally be 15%

Sale of Homes - once redeveloped, previously foreclosed-upon or abandoned homes must be sold for an amount equal to or less than the cost to acquire and redevelop the home (including reasonable developer fees)

Affordability - homes and residential properties made available through NSP must follow HOME rules for both initial and continued affordability

Areas of Greatest Need in N.C.

Use of NSP funds restricted to areas of greatest need

23 counties in North Carolina identified by DCA

Alamance, Brunswick, Buncombe, Cabarrus, Catawba,

Cumberland, Dare, Davidson, Durham, Edgecombe,

Forsyth, Gaston, Guildford, Iredell, Johnston,

Mecklenburg, New Hannover, Pitt, Randolph, Rowan,

Union, Vance and Wake

Initiative Capital’s Program

Line of credit product available to community development corporations and other nonprofits

Must be used to acquire and redevelop foreclosed-upon homes and residential properties

Key product terms: ▫ 12 month term

▫ Maximum loan amount $1,000,000

▫ Can be subordinated to traditional financing

▫ Flexible in order to make projects with the potential for significant impact work

Initiative Capital’s Program - continued

Desired NSP participant developer skill sets –

▫ Ability to target tracts severely affected by foreclosures

▫ Develop a rehabilitation plan that generates the greatest

neighborhood impact using NSP and other resources

▫ Successful and extensive track record in residential rehabilitation

work

▫ Organizational capacity to attract eligible homeowners and sell

foreclosed properties

▫ Experience in management, compliance and reporting of CDBG

funds or other federal funding programs

Initiative Capital’s Program - continued

Bank

Initiative

Capital

CDC borrows $1

million to

purchase,

redevelop and sell

ten foreclosed-

upon homes

Bank REO

Portfolio

Contractors

Income

eligible

borrowers

1st mortgage

loan: $500,000

2nd mortgage

loan: $500,000

Step 1: Purchase & sale

of ten homes (acquisition

price includes purchase

discount)

Step 2: Contracts for redevelopment of

homes (including priority for inclusion of

green building technologies, materials

and systems)

Step 3: Sale of redeveloped homes to

income eligible borrowers.

- Sale price will not exceed cost

of acquisition plus development

costs

- Sale structured to meet HOME

requirements for initial and

continued affordability, as well

as all other program requirements

Contact

For more information:

Chris Gonzalez

Housing Program Officer

Initiative Capital

(919) 835-6073

cgonzalez@ncinitiative.org