Neighborhood Stabilization Program Grants

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Introduction

The Neighborhood Stabilization Program (NSP) was established for the purpose of stabilizing communities that have suffered from foreclosures and abandonment. Through the purchase and redevelopment of foreclosed and abandoned homes and residential properties, the goal of the program is being realized. NSP1, a term that references the NSP funds authorized under Division B, Title III of the Housing and Economic Recovery Act (HERA) of 2008, provides grants to all states and selected local governments on a formula basis. NSP2, a term that references the NSP funds authorized under the American Recovery and Reinvestment Act (the Recovery Act) of 2009, provides grants to states, local governments, nonprofits and a consortium of nonprofit entities on a competitive basis. The Recovery Act also authorized HUD to establish NSP-TA, a $50 million allocation made available to national and local technical assistance providers to support NSP grantees.

NSP1

Under NSP1, HUD allocated $3.92 billion on a formula basis to 309 grantees including 55 states and territories and 254 selected local governments. The program was designed to stabilize communities across America hardest hit by foreclosures. Grant agreements for these funds have already been signed.

NSP2

Under NSP2, HUD allocated $1.93 billion on a competitive basis to states, local governments, and non profit organizations. The program objectives and eligible uses did not change under the Recovery Act, but the allocation process and some regulations on the funds have changed. The deadline to apply for NSP2 funding is July 17, 2009. See NSP2 NOFA for details.

NSP-TA

Under NSP-TA, HUD allocated $50 million on a competitive basis to TA providers supporting HUD’s community development program grantees and subrecipients. The NSP-TA program is open to both national and local TA providers. Applications are currently being reviewed, but new applications are no longer being accepted.

Nature of Program

NSP is a component of the Community Development Block Grant (CDBG). The CDBG regulatory structure is the platform used to implement NSP and the HOME program provides a safe harbor for NSP affordability requirements.

NSP grantees develop their own programs and funding priorities. However, NSP grantees must use at least 25 percent of the funds appropriated for the purchase and redevelopment of abandoned or foreclosed homes or residential properties that will be used to house individuals or families whose incomes do not exceed 50 percent of the area median income. In addition, all activities funded by NSP must benefit low- and moderate-income persons whose income does not exceed 120 percent of area median income. Activities may not qualify under NSP using the "prevent or eliminate slums and blight" or "address urgent community development needs" objectives.

Eligible Uses

NSP funds may be used for activities which include, but are not limited to:

• Establish financing mechanisms for purchase and redevelopment of foreclosed homes and residential properties;
• Purchase and rehabilitate homes and residential properties abandoned or foreclosed;
• Establish land banks for foreclosed homes;
• Demolish blighted structures;
• Redevelop demolished or vacant properties

Homebuyer Assistance

Homebuyers cannot receive assistance directly from HUD. NSP funds can be used to help homebuyers purchase homes, but they must contact an NSP grantee for application details. NSP operates on a national scale, but participation requirements may differ from one state or city to another. For information on how you may purchase a home with NSP assistance please contact an NSP grantee in your area. See NSP Grantee Contacts page for details.

Contact Us

If you would like additional information on the program please use this form to contact a HUD NSP Representative. To view frequently asked questions and responses visit this page.