[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rescinded and permanently canceled all unobligated balances remaining 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5301 note) are hereby repealed.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.

                                  
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