House Report 112-32 - NSP TERMINATION ACT

[House Report 112-32]
[From the U.S. Government Publishing Office]

112th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 112-32

======================================================================

NSP TERMINATION ACT

_______

March 11, 2011.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed

_______

Mr. Bachus, from the Committee on Financial Services,
submitted the following

R E P O R T

together with

MINORITY VIEWS

[To accompany H.R. 861]

[Including cost estimate of the Congressional Budget Office]

The Committee on Financial Services, to whom was referred
the bill (H.R. 861) to rescind the third round of funding for
the Neighborhood Stabilization Program and to terminate the
program, having considered the same, report favorably thereon
with an amendment and recommend that the bill as amended do
pass.
The amendment is as follows:
Strike all after the enacting clause and insert the
following:

SECTION 1. SHORT TITLE.

This Act may be cited as the ``NSP Termination Act''.

SEC. 2. RESCISSION OF $1 BILLION FUNDING FOR 3RD ROUND OF NEIGHBORHOOD
STABILIZATION PROGRAM.

Effective on the date of the enactment of this Act, there are
rescinded and permanently canceled all unobligated balances remaining
available as of such date of enactment of the amounts made available by
section 1497(a) of the Dodd-Frank Wall Street Reform and Consumer
Protection Act (Public Law 111-203; 124 Stat. 2209; 42 U.S.C. 5301
note).

SEC. 3. TERMINATION OF NEIGHBORHOOD STABILIZATION PROGRAM.

(a) Repeal.--Sections 2301 through 2303 of the Housing and Economic
Recovery Act of 2008 (Public Law 110-289; 122 Stat. 2850; 42 U.S.C.
5301 note) are hereby repealed.
(b) Treatment of Remaining Funds.--
(1) Savings clause.--Notwithstanding the repeal under
subsection (a), any amounts made available under the provisions
specified in paragraph (2) of this subsection shall continue to
be governed by any provisions of law applicable to such amounts
as in effect immediately before such repeal.
(2) Remaining funds.--The provisions specified in this
paragraph are as follows:
(A) Section 2301(a) of the Housing and Economic
Recovery Act of 2008 (Public Law 110-289; 122 Stat.
2850; 42 U.S.C. 5301 note).
(B) The second undesignated paragraph under the
heading ``Department of Housing and Urban Development,
Community Planning and Development, Community
Development Fund'' in title XII of division A of the
American Recovery and Reinvestment Act of 2009 (Public
Law 111-5, 123 Stat. 217).
(c) Termination.--Upon the obligation of all amounts made available
under the provisions specified in subsection (b)(2), and outlays to
liquidate all such amounts, the Secretary of Housing and Urban
Development shall terminate the Neighborhood Stabilization Program
authorized under the provisions specified in subsections (a) and
(b)(2).

SEC. 4. PUBLICATION OF MEMBER AVAILABILITY FOR ASSISTANCE.

Not later than 5 days after the date of the enactment of this Act,
the Secretary of Housing and Urban Development shall publish to its
Website on the World Wide Web in a prominent location, large point
font, and boldface type the following statement: ``The Neighborhood
Stabilization Program (NSP) has been terminated. If you are concerned
about the impact of foreclosed properties on your community, please
contact your Member of Congress, State, county, and local officials for
assistance in mitigating the impacts of foreclosed properties on your
community.''.

Purpose and Summary

H.R. 861, The NSP Termination Act, would rescind all
unobligated balances made available for the Neighborhood
Stabilization Program (NSP) authorized by the Dodd-Frank Wall
Street Reform and Consumer Protection Act (Public Law 111-203;
124 Stat. 2209; 42 U.S.C. 5301 note) and terminate the program.

Background and Need for Legislation

H.R. 861 was introduced by Rep. Gary G. Miller to terminate
the Neighborhood Stabilization Program. Congress has
appropriated approximately $7 billion in three rounds of
funding for the Neighborhood Stabilization Program: $4 billion
in initial funding on July 30, 2008 (NSP1); $2 billion in
additional funding in H.R. 1, The American Recovery and
Reinvestment Act of 2009 (NSP2); and $1 billion in additional
funding in the Dodd-Frank Wall Street Reform Act (NSP3).
Eligible uses for funds include emergency assistance to
state and local governments to acquire, develop, redevelop, or
demolish foreclosed homes. For NSP2 and NSP3, the eligibility
requirements also include the establishment of financing
mechanisms to purchase foreclosed homes, the purchase and
rehabilitation of abandoned or foreclosed homes, land banking
of foreclosed homes, demolition of blighted structures, and
redevelopment of vacant or demolished property. NSP1 funding
priority was given to cities, urban areas, rural areas, and
low- and moderate-income areas. Additional consideration was
given to communities with the greatest percentage of
foreclosures, highest percentage of homes financed by subprime
mortgage loans, or those identified by the state or local
government as most likely to face a significant rise in the
rate of home foreclosures. NSP2 was allocated through a
competitive grant program, with the grant recipients primarily
being local and state governments as well as non-profit
entities.
Many have questioned HUD's ability to properly monitor the
use of such extraordinary amounts of money being spent at the
state level in a number of diverse ways as well as the capacity
of nonprofit groups to deploy and use these funds effectively.
The Inspector General for HUD has already identified multiple
misuses of NSP money at the state level, and GAO has questioned
the information systems in place at HUD used to track NSP.
Moreover, there has been little proof to show whether NSP has
resolved the root causes of the increase in foreclosures--an
excess of housing supply and the depreciation of overinflated
home prices. In most cases, the NSP continues to extend and
further exacerbate the current housing downturn and do more
harm than good.
The Neighborhood Stabilization Program represents a costly
bailout for the lenders, servicers and real estate speculators
who made risky bets on the housing market and will now be able
to offload their foreclosed properties onto the government.
Such an approach subsidizes bad investments and contributes to
moral hazard by signaling to future market participants that
their downside risks will be assumed by the government if their
investments sour.

Hearing

The Subcommittee on Insurance, Housing, and Community
Opportunity held a hearing on March 2, 2011 entitled
``Legislative Proposals to End Taxpayer Funding for Ineffective
Foreclosure Mitigation Programs.'' The following witnesses
testified:
The Honorable Neil M. Barofsky, Special
Inspector General for the Troubled Asset Relief
Program, Office of the Special Inspector General
The Honorable David Stevens, Assistant
Secretary for Housing and Commissioner of the Federal
Housing Administration, Department of Housing and Urban
Development
The Honorable Mercedes M. Marquez, Assistant
Secretary, Community Planning and Development,
Department of Housing and Urban Development
Mr. Matthew J. Scire, Director, Financial
Markets and Community Investment, U.S. Government
Accountability Office
Ms. Katie Jones, Analyst in Housing Policy,
Congressional Research Service, Library of Congress

Committee Consideration

The Committee on Financial Services met in open session on
March 3, 2011 and ordered H.R.861, as amended, favorably
reported to the House by a record vote of 31 yeas and 24 nays
(Record vote no. FC-15).

Committee Votes

Clause 3(b) of rule XIII of the Rules of the House of
Representatives require the Committee to list the record vote
on the motion to report legislation and amendments thereto. A
motion by Chairman Bachus to report the bill, as amended to the
House with a favorable recommendation was agreed to by a record
vote of 31 yeas and 24 nays (Record vote no. FC-15). The names
of Members voting for and against follow:

RECORD VOTE NO. FC-15
----------------------------------------------------------------------------------------------------------------
Representative Aye Nay Present Representative Aye Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Bachus..................... X ........ ......... Mr. Frank (MA)... ........ ........ .........
Mr. Hensarling................. X ........ ......... Ms. Waters....... ........ X .........
Mr. King (NY).................. ........ ........ ......... Mrs. Maloney..... ........ X .........
Mr. Royce...................... X ........ ......... Mr. Gutierrez.... ........ ........ .........
Mr. Lucas...................... X ........ ......... Ms. Velazquez.... ........ X .........
Mr. Paul....................... X ........ ......... Mr. Watt......... ........ ........ .........
Mr. Manzullo................... X ........ ......... Mr. Ackerman..... ........ X .........
Mr. Jones...................... X ........ ......... Mr. Sherman...... ........ X .........
Mrs. Biggert................... X ........ ......... Mr. Meeks........ ........ X .........
Mr. Gary G. Miller (CA)........ X ........ ......... Mr. Capuana...... ........ X .........
Mrs. Capito.................... X ........ ......... Mr. Hinojosa..... ........ X .........
Mr. Garrett.................... X ........ ......... Mr. Clay......... ........ X .........
Mr. Neugebauer................. X ........ ......... Mrs. McCarthy ........ X .........
(NY).
Mr. McHenry.................... X ........ ......... Mr. Baca......... ........ X .........
Mr. Campbell................... X ........ ......... Mr. Lynch........ ........ X .........
Mrs. Bachmann.................. X ........ ......... Mr. Miller (NC).. ........ X .........
Mr. Marchant................... ........ ........ ......... Mr. David Scott ........ X .........
(GA).
Mr. McCotter................... X ........ ......... Mr. Al Green (TX) ........ X .........
Mr. McCarthy (CA).............. X ........ ......... Mr. Cleaver...... ........ X .........
Mr. Pearce..................... X ........ ......... Ms. Moore........ ........ X .........
Mr. Posey...................... X ........ ......... Mr. Ellison...... ........ X .........
Mr. Fitzpatrick................ X ........ ......... Mr. Perlmutter... ........ X .........
Mr. Westmoreland............... X ........ ......... Mr. Donnelly..... ........ X .........
Mr. Luetkemeyer................ X ........ ......... Mr. Carson....... ........ X .........
Mr. Huizenga................... X ........ ......... Mr. Himes........ ........ X .........
Mr. Duffy...................... X ........ ......... Mr. Peters....... ........ X .........
Ms. Hayworth................... X ........ ......... Mr. Carney....... ........ X .........
Mr. Renacci.................... X ........ .........
Mr. Hurt....................... X ........ .........
Mr. Dold....................... ........ ........ .........
Mr. Schweikert................. X ........ .........
Mr. Grimm...................... X ........ .........
Mr. Canseco.................... X ........ .........
Mr. Stivers.................... X ........ .........
----------------------------------------------------------------------------------------------------------------

During consideration of H.R. 861, the following amendments
were considered:
1. An amendment offered by Ms. Waters and Mr. Ellison, no.
1, to require the Secretary of Housing and Urban Development to
inform NSP recipients of the program termination was not agreed
to by a recorded vote of 21 yeas to 26 nays, (Record vote no.
FC-13).

RECORD VOTE NO. FC-13
----------------------------------------------------------------------------------------------------------------
Representative Aye Nay Present Representative Aye Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Bachus..................... ........ X ......... Mr. Frank (MA)... ........ ........ .........
Mr. Hensarling................. ........ X ......... Ms. Waters....... X ........ .........
Mr. King (NY).................. ........ ........ ......... Mrs. Maloney..... X ........ .........
Mr. Royce...................... ........ X ......... Mr. Gutierrez.... ........ ........ .........
Mr. Lucas...................... ........ X ......... Ms. Velazquez.... X ........ .........
Mr. Paul....................... ........ X ......... Mr. Watt......... ........ ........ .........
Mr. Manzullo................... ........ X ......... Mr. Ackerman..... X ........ .........
Mr. Jones...................... ........ X ......... Mr. Sherman...... X ........ .........
Mrs. Biggert................... ........ X ......... Mr. Meeks........ ........ ........ .........
Mr. Gary G. Miller (CA)........ ........ ........ ......... Mr. Capuana...... X ........ .........
Mrs. Capito.................... ........ X ......... Mr. Hinojosa..... X ........ .........
Mr. Garrett.................... ........ X ......... Mr. Clay......... ........ ........ .........
Mr. Neugebauer................. ........ X ......... Mrs. McCarthy X ........ .........
(NY).
Mr. McHenry.................... ........ X ......... Mr. Baca......... X ........ .........
Mr. Campbell................... ........ X ......... Mr. Lynch........ X ........ .........
Mrs. Bachmann.................. ........ X ......... Mr. Miller (NC).. X ........ .........
Mr. Marchant................... ........ ........ ......... Mr. David Scott X ........ .........
(GA).
Mr. McCotter................... ........ X ......... Mr. Al Green (TX) X ........ .........
Mr. McCarthy (CA).............. ........ ........ ......... Mr. Cleaver...... X ........ .........
Mr. Pearce..................... ........ X ......... Ms. Moore........ X ........ .........
Mr. Posey...................... ........ X ......... Mr. Ellison...... ........ ........ .........
Mr. Fitzpatrick................ ........ X ......... Mr. Perlmutter... X ........ .........
Mr. Westmoreland............... ........ X ......... Mr. Donnelly..... X ........ .........
Mr. Luetkemeyer................ ........ X ......... Mr. Carson....... X ........ .........
Mr. Huizenga................... ........ X ......... Mr. Himes........ X ........ .........
Mr. Duffy...................... ........ X ......... Mr. Peters....... X ........ .........
Ms. Hayworth................... ........ X ......... Mr. Carney....... X ........ .........
Mr. Renacci.................... ........ X .........
Mr. Hurt....................... ........ ........ .........
Mr. Dold....................... ........ ........ .........
Mr. Schweikert................. ........ ........ .........
Mr. Grimm...................... ........ ........ .........
Mr. Canseco.................... ........ X .........
Mr. Stivers.................... ........ X .........
----------------------------------------------------------------------------------------------------------------

2. An amendment offered by Mr. Green, no. 2, requiring the
GAO to conduct a study of termination of third round funding of
neighborhood stabilization program, was not agreed to by a
recorded vote of 24 yeas and 31 nays, (Record vote no. FC-14).

RECORD VOTE NO. FC-14
----------------------------------------------------------------------------------------------------------------
Representative Aye Nay Present Representative Aye Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Bachus..................... ........ X ......... Mr. Frank (MA)... ........ ........ .........
Mr. Hensarling................. ........ X ......... Ms. Waters....... X ........ .........
Mr. King (NY).................. ........ ........ ......... Mrs. Maloney..... X ........ .........
Mr. Royce...................... ........ X ......... Mr. Gutierrez.... ........ ........ .........
Mr. Lucas...................... ........ X ......... Ms. Velazquez.... X ........ .........
Mr. Paul....................... ........ X ......... Mr. Watt......... ........ ........ .........
Mr. Manzullo................... ........ X ......... Mr. Ackerman..... X ........ .........
Mr. Jones...................... ........ X ......... Mr. Sherman...... X ........ .........
Mrs. Biggert................... ........ X ......... Mr. Meeks........ X ........ .........
Mr. Gary G. Miller (CA)........ ........ X ......... Mr. Capuana...... X ........ .........
Mrs. Capito.................... ........ X ......... Mr. Hinojosa..... X ........ .........
Mr. Garrett.................... ........ X ......... Mr. Clay......... X ........ .........
Mr. Neugebauer................. ........ X ......... Mrs. McCarthy X ........ .........
(NY).
Mr. McHenry.................... ........ X ......... Mr. Baca......... X ........ .........
Mr. Campbell................... ........ X ......... Mr. Lynch........ X ........ .........
Mrs. Bachmann.................. ........ X ......... Mr. Miller (NC).. X ........ .........
Mr. Marchant................... ........ ........ ......... Mr. David Scott X ........ .........
(GA).
Mr. McCotter................... ........ X ......... Mr. Al Green (TX) X ........ .........
Mr. McCarthy (CA).............. ........ X ......... Mr. Cleaver...... X ........ .........
Mr. Pearce..................... ........ X ......... Ms. Moore........ X ........ .........
Mr. Posey...................... ........ X ......... Mr. Ellison...... X ........ .........
Mr. Fitzpatrick................ ........ X ......... Mr. Perlmutter... X ........ .........
Mr. Westmoreland............... ........ X ......... Mr. Donnelly..... X ........ .........
Mr. Luetkemeyer................ ........ X ......... Mr. Carson....... X ........ .........
Mr. Huizenga................... ........ X ......... Mr. Himes........ X ........ .........
Mr. Duffy...................... ........ X ......... Mr. Peters....... X ........ .........
Ms. Hayworth................... ........ X ......... Mr. Carney....... X ........ .........
Mr. Renacci.................... ........ X .........
Mr. Hurt....................... ........ X .........
Mr. Dold....................... ........ ........ .........
Mr. Schweikert................. ........ X .........
Mr. Grimm...................... ........ X .........
Mr. Canseco.................... ........ X .........
Mr. Stivers.................... ........ X .........
----------------------------------------------------------------------------------------------------------------

The following amendment was also considered by the
Committee:
1. An amendment offered by Ms. Waters, no. 3, requiring HUD
to publish a notice on its website regarding termination of
NSP, was withdrawn.
2. An amendment offered by Ms. Waters, as revised, no. 4,
requiring HUD to publish to its website a statement indicating
that the NSP has been terminated and that you may contact your
Member of Congress, state, county, and local officials for
assistance, was agreed to by voice vote.

Committee Oversight Findings

Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
House of Representatives, the Committee has held a hearing and
made findings that are reflected in this report.

Performance Goals and Objectives

Pursuant to clause 3(c)(4) of rule XIII of the Rules of the
House of Representatives, the Committee establishes the
following performance related goals and objectives for this
legislation:
The purposes of H.R. 861, The NSP Termination Act, are to
rescind all unobligated balances made available for the
Neighborhood Stabilization Program (NSP) as authorized by the
Dodd-Frank Wall Street Reform and Consumer Protection Act
(Public Law 111-203; 124 Stat. 2209; 42 U.S.C. 5301 note) and
to terminate the program.

New Budget Authority, Entitlement Authority, and Tax Expenditures

In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee adopts as its
own the estimate of new budget authority, entitlement
authority, or tax expenditures or revenues contained in the
cost estimate prepared by the Director of the Congressional
Budget Office pursuant to section 402 of the Congressional
Budget Act of 1974.

Committee Cost Estimate

The Committee adopts as its own the cost estimate prepared
by the Director of the Congressional Budget Office pursuant to
section 402 of the Congressional Budget Act of 1974.

Congressional Budget Office Estimates

Pursuant to clause 3(c)(3) of rule XIII of the Rules of the
House of Representatives, the following is the cost estimate
provided by the Congressional Budget Office pursuant to section
402 of the Congressional Budget Act of 1974:

U.S. Congress,
Congressional Budget Office,
Washington, DC, March 11, 2011.
Hon. Spencer Bachus,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 861, the NSP
Termination Act.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Dan Hoople.
Sincerely,
Douglas W. Elmendorf.
Enclosure.

H.R. 861--NSP Termination Act

H.R. 861 would terminate the Neighborhood Stabilization
Program (NSP) and would rescind certain unobligated balances
associated with the program. CBO estimates that enacting H.R.
861 would not affect direct spending because CBO expects that
all funds targeted by the legislation would be obligated by the
time the bill is enacted. The bill also would not affect
revenues; therefore, pay-as you-go procedures do not apply.
The bill contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would impose no costs on state, local, or tribal governments.
Since 2008, the Congress has provided about $7 billion to
the NSP for grants to state and local governments to purchase
and redevelop foreclosed and abandoned homes and residential
properties (see Public Laws 110-289, 111-5, and 111-203). As of
February 2011, about $6 billion of those funds have been
obligated (that is, the federal government has entered into a
legal commitment to make those funds available to grantees).
CBO expects that the program will obligate the remaining $1
billion over the next few months.
H.R. 861 would terminate the NSP once all obligations of
the program have been liquidated. The legislation also would
cancel unobligated balances that remain from the $1 billion
provided by Public Law 111-203. (The legislation would have no
effect on the $6 billion made available by Public Laws 110-289
and 111-5.)
For this estimate, CBO assumes H.R. 861 will be enacted in
the summer of 2011, at which point all remaining funds are
expected to be obligated. Because the bill would only cancel
unobligated balances, spending would not be affected.\1\
---------------------------------------------------------------------------
\1\If the bill was enacted sooner, or if the pace of obligations
was slower than anticipated, some unobligated balances may remain at
the time of enactment. In that case, the budget authority of the NSP
would be reduced by the amount of unobligated balances, resulting in a
corresponding decrease in direct spending.
---------------------------------------------------------------------------
The CBO staff contact for this estimate is Daniel Hoople.
The estimate was approved by Theresa Gullo, Deputy Assistant
Director for Budget Analysis.

Federal Mandates Statement

The Committee adopts as its own the estimate of Federal
mandates prepared by the Director of the Congressional Budget
Office pursuant to section 423 of the Unfunded Mandates reform
Act.

Advisory Committee Statement

No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.

Applicability To Legislative Branch

The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of the section
102(b)(3) of the Congressional Accountability Act.

Earmark Identification

H.R. 861 does not contain any congressional earmarks,
limited tax benefits, or limited tariffs benefits as defined in
clause 9 of rule XXI.

Section-by-Section Analysis of the Legislation

Section 1. Short title

This Act may be cited as the ``NSP Termination Act.''

Section 2. Rescission of funding for FHA Refinance Program

Section Two rescinds and permanently cancels all unexpended
balances remaining available after the enactment of the bill
for the Neighborhood Stabilization Program for those amounts
made available by section 1497(a) of the Dodd-Frank Wall Street
Reform and Consumer Protection Act (Public Law 111-203; 124
Stat. 2209; 42 U.S.C. 5301 note).

Section 3. Termination of Neighborhood Stabilization Program

Section Three repeals sections 2301 through 2303 of the
Housing and Economic Recovery Act of 2008 (HERA) (Public Law
110-289). Any remaining amounts made available prior to the
date of enactment of this Act shall continue to be used as
governed by section 1497(a) of the Dodd-Frank Wall Street
Reform and Consumer Protection Act. After all amounts under
section 1497(a) of the Dodd-Frank have been obligated, the
Secretary of Housing and Urban Development shall terminate the
Neighborhood Stabilization Program.

Section 4. Publication of member availability for assistance

Section Four requires the Secretary of Housing and Urban
Development to publish to its Website on the World Wide Web in
a prominent location, large font and boldface type a statement
that the Neighborhood Stabilization Program is terminated and
that anyone who is concerned about the impact of foreclosed
properties in their community should contact their Member of
Congress, State, county and local officials for assistance in
mitigating the impacts of foreclosed properties in their
community.

Changes in Existing Law Made by the Bill, as Reported

In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets and
existing law in which no change is proposed is shown in roman):

HOUSING AND ECONOMIC RECOVERY ACT OF 2008

* * * * * * *

TITLE III--EMERGENCY ASSISTANCE FOR THE REDEVELOPMENT OF ABANDONED AND
FORECLOSED HOMES

[SEC. 2301. EMERGENCY ASSISTANCE FOR THE REDEVELOPMENT OF ABANDONED AND
FORECLOSED HOMES.

[(a) Direct Appropriations.--There are appropriated out of
any money in the Treasury not otherwise appropriated for the
fiscal year 2008, $4,000,000,000, to remain available until
expended, for assistance to States and units of general local
government (as such terms are defined in section 102 of the
Housing and Community Development Act of 1974 (42 U.S.C. 5302))
for the redevelopment of abandoned and foreclosed upon homes
and residential properties.
[(b) Allocation of Appropriated Amounts.--
[(1) In general.--The amounts appropriated or
otherwise made available to States and units of general
local government under this section shall be allocated
based on a funding formula established by the Secretary
of Housing and Urban Development (in this title
referred to as the ``Secretary'').
[(2) Formula to be devised swiftly.--The funding
formula required under paragraph (1) shall be
established not later than 60 days after the date of
enactment of this section.
[(3) Criteria.--The funding formula required under
paragraph (1) shall ensure that any amounts
appropriated or otherwise made available under this
section are allocated to States and units of general
local government with the greatest need, as such need
is determined in the discretion of the Secretary based
on--
[(A) the number and percentage of home
foreclosures in each State or unit of general
local government;
[(B) the number and percentage of homes
financed by a subprime mortgage related loan in
each State or unit of general local government;
and
[(C) the number and percentage of homes in
default or delinquency in each State or unit of
general local government.
[(4) Distribution.--Amounts appropriated or otherwise
made available under this section shall be distributed
according to the funding formula established by the
Secretary under paragraph (1) not later than 30 days
after the establishment of such formula.
[(c) Use of Funds.--
[(1) In general.--Any State or unit of general local
government that receives amounts pursuant to this
section shall, not later than 18 months after the
receipt of such amounts, use such amounts to purchase
and redevelop abandoned and foreclosed homes and
residential properties.
[(2) Priority.--Any State or unit of general local
government that receives amounts pursuant to this
section shall in distributing such amounts give
priority emphasis and consideration to those
metropolitan areas, metropolitan cities, urban areas,
rural areas, low- and moderate-income areas, and other
areas with the greatest need, including those--
[(A) with the greatest percentage of home
foreclosures;
[(B) with the highest percentage of homes
financed by a subprime mortgage related loan;
and
[(C) identified by the State or unit of
general local government as likely to face a
significant rise in the rate of home
foreclosures.
[(3) Exception for certain states.--Each State that
has received the minimum allocation of amounts pursuant
to the requirement under section 2302 may, to the
extent such State has fulfilled the requirements of
paragraph (2), distribute any remaining amounts to
areas with homeowners at risk of foreclosure or in
foreclosure without regard to the percentage of home
foreclosures in such areas.
[(4) Eligible uses.--Amounts made available under
this section may be used to--
[(A) establish financing mechanisms for
purchase and redevelopment of foreclosed upon
homes and residential properties, including
such mechanisms as soft-seconds, loan loss
reserves, and shared-equity loans for low- and
moderate-income homebuyers;
[(B) purchase and rehabilitate homes and
residential properties that have been abandoned
or foreclosed upon, in order to sell, rent, or
redevelop such homes and properties;
[(C) establish and operate land banks for
homes and residential properties that have been
foreclosed upon
[(D) demolish blighted structures; and
[(E) redevelop demolished or vacant
properties.
[(d) Limitations.--
[(1) On purchases.--Any purchase of a foreclosed upon
home or residential property under this section shall
be at a discount from the current market appraised
value of the home or property, taking into account its
current condition, and such discount shall ensure that
purchasers are paying below-market value for the home
or property.
[(2) Rehabilitation.--Any rehabilitation of a
foreclosed-upon home or residential property under this
section shall be to the extent necessary to comply with
applicable laws, codes, and other requirements relating
to housing safety, quality, and habitability, in order
to sell, rent, or redevelop such homes and properties.
Rehabilitation may include improvements to increase the
energy efficiency or conservation of such homes and
properties or provide a renewable energy source or
sources for such homes and properties.
[(3) Sale of homes.--If an abandoned or foreclosed
upon home or residential property is purchased,
redeveloped, or otherwise sold to an individual as a
primary residence, then such sale shall be in an amount
equal to or less than the cost to acquire and redevelop
or rehabilitate such home or property up to a decent,
safe, and habitable condition.
[(e) Rules of Construction.--
[(1) In general.--Except as otherwise provided by
this section, amounts appropriated, revenues generated,
or amounts otherwise made available to States and units
of general local government under this section shall be
treated as though such funds were community development
block grant funds under title I of the Housing and
Community Development Act of 1974 (42 U.S.C. 5301 et
seq.).
[(2) No match.--No matching funds shall be required
in order for a State or unit of general local
government to receive any amounts under this section.
[(f) Authority to Specify Alternative Requirements.--
[(1) In general.--In administering any amounts
appropriated or otherwise made available under this
section, the Secretary may specify alternative
requirements to any provision under title I of the
Housing and Community Development Act of 1974 (except
for those related to fair housing, nondiscrimination,
labor standards, and the environment) in accordance
with the terms of this section and for the sole purpose
of expediting the use of such funds.
[(2) Notice.--The Secretary shall provide written
notice of its intent to exercise the authority to
specify alternative requirements under paragraph (1) to
the Committee on Banking, Housing and Urban Affairs of
the Senate and the Committee on Financial Services of
the House of Representatives not later than 10 business
days before such exercise of authority is to occur.
[(3) Low and moderate income requirement.--
[(A) In general.--Notwithstanding the
authority of the Secretary under paragraph
(1)--
[(i) all of the funds appropriated or
otherwise made available under this
section shall be used with respect to
individuals and families whose income
does not exceed 120 percent of area
median income; and
[(ii) not less than 25 percent of the
funds appropriated or otherwise made
available under this section shall be
used for the purchase and redevelopment
of abandoned or foreclosed upon homes
or residential properties that will be
used to house individuals or families
whose incomes do not exceed 50 percent
of area median income.
[(B) Recurrent requirement.--The Secretary
shall, by rule or order, ensure, to the maximum
extent practicable and for the longest feasible
term, that the sale, rental, or redevelopment
of abandoned and foreclosed upon homes and
residential properties under this section
remain affordable to individuals or families
described in subparagraph (A).
[(g) Periodic Audits.--In consultation with the Secretary of
Housing and Urban Development, the Comptroller General of the
United States shall conduct periodic audits to ensure that
funds appropriated, made available, or otherwise distributed
under this section are being used in a manner consistent with
the criteria provided in this section.

[SEC. 2302. NATIONWIDE DISTRIBUTION OF RESOURCES.

[Notwithstanding any other provision of this Act or the
amendments made by this Act, each State shall receive not less
than 0.5 percent of funds made available under section 2301
(relating to emergency assistance for the redevelopment of
abandoned and foreclosed homes).

[SEC. 2303. LIMITATION ON USE OF FUNDS WITH RESPECT TO EMINENT DOMAIN.

[No State or unit of general local government may use any
amounts received pursuant to section 2301 to fund any project
that seeks to use the power of eminent domain, unless eminent
domain is employed only for a public use: Provided, That for
purposes of this section, public use shall not be construed to
include economic development that primarily benefits private
entities.]

* * * * * * *

MINORITY VIEWS

H.R. 861, the ``The Neighborhood Stabilization Program
(NSP) Termination Act'' is one of four bills being advanced by
the Majority as a coordinated assault on federal programs
designed to address the nationwide housing and foreclosure
crisis. The bill would rescind $1 billion which will soon be
obligated to states and local governments in the hardest hit
communities for the purchase and rehabilitation of foreclosed
and abandoned homes, to address blight and deterioration of
neighborhoods experiencing a high foreclosure rate.
This program is one of a number of complementary federal
programs that address different problems posed by our current
housing programs. The other programs that the Majority is
shutting down are the HAMP loan modification program, a FHA
refinance program that is used in conjunction with principal
mortgage reductions, and a loan program for unemployed
homeowners to bridge the gap so that homeowners can resume
payments when they find a job. At the March 2, 2011, Insurance,
Housing and Community Opportunity Subcommittee hearing on these
four bills, not a single witness--including the GAO and
SIGTARP, who were witnesses called by the Majority--supported
shutting down any of these four programs at this time.
NSP has received three rounds of federal funding. NSP1 was
authorized and initially funded in the Housing and Economic
Recovery Act (HERA) (Pub. L. 110-289), NSP2 was funded in the
American Recovery and Reinvestment Act (ARRA) (Pub. L. 111-5)
and NSP3 was funded in the Dodd-Frank Wall Street Reform and
Consumer Protection Act (Dodd-Frank) (Pub. L, 111-203). The
bill addresses all three rounds of funding. Section 2 of the
bill would rescind and cancel all unobligated balances for
NSP3. Section 3 would repeal the NSP language in HERA and, with
respect to NSP1 and NSP2 funds made available, such funds are
governed by NSP requirements in effect before repeal. Section 3
also terminates NSP1 and NSP2 upon the liquidation of obligated
amounts. As amended at the March 9, 2011, Committee mark-up,
the bill also requires that not later than five days after
enactment, HUD shall publish on its website the following
statement: ``The Neighborhood Stabilization Program (NSP) has
been terminated. If you are concerned about the impact of
foreclosed properties in your community, please contact your
Member of Congress, state, county and local officials for
assistance in mitigating the impacts of foreclosed properties
on your community.''
While the Majority argues that this program is a burden on
taxpayers, the original Dodd-Frank conference report included
Title XVI ``Financial Crisis Assessment and Fund'' was which
was negotiated by House and Senate Democratic Conferees and
included a fee on financial institutions to pay for the
implementation costs associated with the bill, additional
funding for mortgage assistance to unemployed homeowners and a
third round of funding for NSP. This provision was ultimately
rejected by Senate Republicans. As a result, while the Majority
may complain about the impact of this NSP funding and the other
Dodd-Frank funding provision for unemployed homeowner
assistance on taxpayers, it is Republicans who insisted on
blocking this fee on large financial institutions, thereby
shifting the cost of these two provisions to taxpayers.
HERA provided $3.92 billion in NSP1 grant funds to all
states and selected local governments on a formula basis. ARRA
provided an additional $2 billion in NSP2 funds to states,
local governments, nonprofits and a consortium of nonprofit
entities on a competitive basis and for technical assistance.
Dodd-Frank provides $1 billion in grants to all states and
selected local governments on a formula basis.
All NSP1 and NSP2 allocations to grantees have been
obligated by HUD. As for NSP3, HUD announced formula
allocations on September 8, 2010, and, in subsequent guidance,
established a deadline of March 1, 2011, for submission of
action plans describing the intended uses of NSP3 funds. HUD is
in the process of reviewing these plans and expects to obligate
all NSP3 funds allocated to states and local governments by
March 31, 2011.
NSP was established to help stabilize communities that have
suffered from foreclosures and abandonment through the purchase
and redevelopment of foreclosed and abandoned homes and
residential properties. NSP grants provide critical assistance
to state and local governments and non-profit developers that
collaborate to acquire foreclosed or abandoned property; to
demolish or rehabilitate acquired or blighted properties; and/
or to establish financing mechanisms such as down-payment and
closing cost assistance to low- to middle-income homebuyers.
Grantees can also create land banks to assemble, temporarily
manage, and dispose of foreclosed homes. NSP grantees must use
at least 25% of the funds appropriated to house individuals or
families whose incomes do not exceed 50% 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% of the area median income.
At the March 2, 2011, hearing, Mercedes M. Marquez, HUD
Assistant Secretary for Community Planning and Development
provided detailed information about the major impact that NSP
is having in mitigating the negative effects that vacant and
abandoned properties have on communities. From the total NSP
appropriation of $7 billion, HUD estimates that 100,000
properties in the hardest-hit areas will be impacted. This
number of properties makes up almost 20 percent of the real
estate owned (REO) properties over the last 18 months in NSP-
targeted areas. Grantees report that more than 36,000
properties are either under construction or rehab, a third of
the overall estimate. Moreover, HUD estimates that NSP will
support 93,000 jobs nationwide.
Assistant Secretary Marquez reported that as of December
2010, NSP1 grantees have produced more than 5,300 households in
rehabilitated or newly constructed units and more than 6,000
households have received direct homeownership assistance to
acquire formerly foreclosed or abandoned properties. In
addition, more than 9,700 blighted properties have been
demolished or cleared with NSP1 funds. NSP2 grantees project
serving 11,000 households through rehabilitation and new
construction and more than 5,200 households through direct
homeownership support, and about 3,800 blighted properties
cleared. HUD estimates that at least 6,000 households will
benefit from NSP3 through purchase/rehabilitation of foreclosed
or abandoned residential property or new construction on
redeveloped lots; and about 3,000 households will benefit from
direct homeownership assistance. Rescinding the final $1
billion of NSP3 funding would stall this progress in reclaiming
affordable housing and neighborhoods and remove critically
needed investments from the hardest hit housing markets.
HUD has conducted extensive oversight of the NSP program
and grantees. Assistant Secretary Marquez testified that such
oversight includes monitoring, risk assessment, and auditing
NSP grantees as well as providing training and technical
assistance to address grantee capacity issues. To date, HUD's
Office of Inspector General (OIG) has completed 42 NSP
compliance audits. Although the OIG found numerous accounting
discrepancies and inaccurate and incomplete reporting by NSP 1
grantees, several OIG audits found that grantees generally
compiled with NSP1 requirements. In addition, a June 2010, OIG
audit of the NSP2 competition (HUD OIG Audit Report 2010-AT-
0001) found that HUD properly evaluated the applications and
selected the grantees for NSP2 funding.
In December 2010, GAO completed a HERA-mandated report on
NSP1 (GAO-11-48) that examined HUD's implementation of NSP1,
grantee actions in meeting key NSP1 requirements, actions HUD
has taken to mitigate program risks and ensure grantee
compliance, and HUD's efforts to collect and assess program
data. GAO concluded that HUD established internal control
procedures to mitigate risks and promote compliance with
program requirements and that for NSP 1 grantees contacted by
GAO, they generally showed compliance with program
requirements. GAO did find some financial management
deficiencies by these grantees, which HUD is requiring that the
grantees correct. GAO also found that data on program outputs
could be improved and HUD is working to make those
improvements.
Finally, Assistant Secretary Marquez's testimony included
several examples and case studies where NSP dollars have been
efficiently and effectively used to provide affordable housing,
create jobs, leverage private investment, and improve
communities. Given the positive impact of NSP funding through
out the country, several organizations have expressed their
strong opposition to H.R. 861 and support for continued funding
of the program. These national, state, local organizations
include the National Association of Counties, National League
of Cities, U.S. Conference of Mayors, National Community
Development Association, National Association for County
Community and Economic Development, Council of State Community
Development Agencies, Enterprise Community Partners, Inc.,
Association for Neighborhood and Housing Development, Arizona
Foreclosure Prevention Task Force, Atlanta Neighborhood
Development Partnership, Inc., Center for Community Progress,
Center for New York City Neighborhoods, Citizens' Housing and
Planning Association, City of Chicago, Department of Housing
and Economic Development, City of Newark, Columbus Housing
Partnership, Council of State Community Development Agencies,
Cypress Hills Local Development Corporation, Detroit Office of
Foreclosure Prevention and Response, Diamond State Community
Land Trust, Enterprise Community Partners, Habitat for Humanity
International, Healthy Neighborhoods, Inc., HousingWorks RI,
Greater Rochester Housing Partnership, Local Initiatives
Support Corporation, Louisiana Housing Alliance, Massachusetts
Housing Partnership, Mercy Housing, National Association of
Housing and Redevelopment Officials, National Community Land
Trust Network, National Community Reinvestment Coalition,
National Community Stabilization Trust, National Council of
State Housing Agencies, National Housing Conference, National
Housing Institute, National Law Center on Homelessness &
Poverty, National NeighborWorks Association, Neighborhood
Housing Services of Phoenix, Inc., Neighborhood Housing
Services of South Florida, New York Mortgage Coalition,
Northfield Community LDC of Staten Island, Inc., Omni New York,
LLC., PolicyLink, Rebuilding Together, Restoring Urban
Neighborhoods, LLC., RISE, America!, Smart Growth America, St.
Ambrose Housing Aid Center, Stewards for Affordable Housing for
the Future, The Community Builders, Inc., The Housing
Partnership Network, The Wisconsin Partnership for Housing
Development, Inc., and Urban Housing Solutions, Inc. Letters
from these organizations opposing the bill and in support of
the NSP program were placed in the March 2, 2011 Subcommittee
hearing record and March 10, 2011 full Committee mark-up
record.

Barney Frank.
Gary Ackerman.
Andre Carson.
Melvin Watt.
Luis Gutierrez.
Al Green.
Ruben Hinojosa.
Emanuel Cleaver.
Joe Baca.
Brad Miller.
Keith Ellison.
Maxine Waters.
Carolyn Maloney.
Stephen Lynch.
Michael Capuano.
Nydia Velazquez.