NSP Funds to Alleviate Effects of Bank Foreclosure Properties

Michigan is experiencing the worst of the effects of the unabated increase in the number of bank foreclosure properties. The city landscape of Detroit is dotted with abandon and vacant bank foreclosure properties resulting from increasing unemployment rate.

These foreclosed properties have pulled down home values in the area, created blight and have fallen into a total disrepair that repairing them is not economically feasible anymore.

Prevailing Community Development Corp. executive director and renovation supporter Chaunci Cline conceded that many foreclosed properties in Detroit need to be demolished. She believed that these abandon and vacant foreclosed homes are a danger to neighborhoods.

She would like to see the dilapidated houses near schools to be demolished first because they posed a threat to school children who walked pass them to and from school.

The demolition of these dilapidated, abandon and vacant foreclosed homes are the priority of the National Stabilization Program (NSP) that will grant $264 million to Michigan to address the growing devastating effects of foreclosures on neighborhoods.

The total grant allocated to Michigan is the third largest under the U.S. Department of Housing and Urban Development’s $4 billion NSP.

The federal program is funding projects designed to alleviate the devastating effects of foreclosures on communities and neighborhoods across the country. It also aims to boost home redevelopment and ownership.

Southeast Michigan will receive a big portion of the federal funding which is about $137 million. The funds will be used to buy and rehabilitate bank foreclosure properties, establish land banks for repossessed homes, demolish deteriorating and dilapidated structures and rehabilitate and redevelop areas where demolished properties are located.

The Michigan State Housing Development Authority and outlying communities will also receive a portion of the federal NSP funding.

Communities eligible for the NSP funding should already be a recipient of Community Development Block Grant. They will be evaluated based on several factors, including the number of vacancies, distressed properties, subprime loan rates and defaulted loans.

Communities are required to submit their plans for a neighborhood development project which will be approved by the HUD first before they can receive the funding.

The NSP funds in Michigan are used in different ways, including re-creating, redeveloping and reassessing housing and developing bank owned foreclosure properties into affordable rental homes for families who are earning not more than 50 percent of the area’s median income.

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