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Federal NSP <br />November 17,`2008 <br />Page 3 <br />2. Authorize the Executive Director to execute all documents relating <br />thereto. <br />DISCUSSION <br />The Housing and Economic Recovery Act of 2008 (HERA) appropriated $4 <br />billion to be distributed to states and localities for the redevelopment <br />of abandoned and foreclosed homes. The grant program funded through <br />this appropriation is referred to as the Neighborhood Stabilization <br />Program (NSP) . Under the terms of the funding distribution formula <br />established by the U. S. Department of Housing and Urban Development <br />(HUD), Santa Ana has been allocated $5,795,151. The purpose of the <br />program is to stabilize neighborhoods that have been impacted by <br />foreclosed or abandoned properties. Congress did not want this program <br />to be perceived as a bank bailout; therefore, HUD is requiring that the <br />overall portfolio of acquisitions be discounted 15 percent of the <br />appraised value. These funds may not be used to assist homeowners to <br />avoid foreclosure; rather, the property must have gone through a <br />foreclosure action, or has been abandoned. <br />HUD based its calculation for the distribution of NSP funds on the <br />number and percent of foreclosures, subprime mortgage loans and default <br />or delinquencies in a given area. The funds must be contractually <br />obligated within 18 months of approval of the application. <br />Currently, Santa Ana has approximately 1,464 foreclosed properties and <br />1,126 properties with a Notice of Default. The data indicates that the <br />areas of greatest need for single- family structures are aggregated in <br />the central core of the City (Exhibit 1). On the other hand, the areas <br />of greatest need for condominiums are concentrated in outlying census <br />tracts. <br />The regulations identify five allowable programmatic uses for the <br />purchase of foreclosed or abandoned homes. <br />1. Establishment of financing mechanisms such as soft seconds and <br />shared equity loans. <br />2. Purchase and rehabilitation for the purpose of selling, renting or <br />redeveloping. <br />3. Establishment of a land bank for the purpose of assembling, <br />managing and ultimately disposing of vacant land in a manner that <br />8 -37 <br />