Congressman Cohen Announces $14.3 Million in Housing Grants for Memphis and Shelby County
Washington, DC – October 8, 2008 – (RealEstateRama) — Today, Congressman Steve Cohen (TN-09) announced that the City of Memphis received a $11,506,414.97 grant from the U.S. Department of Housing and Urban Development (HUD), while Shelby County received $2,757.708.15. These funds will go toward particularly hard-hit areas trying to respond to the effects of high foreclosures as part of the Neighborhood Stabilization Program (NSP).
“Help is on the way for homeowners in the 9th District in areas trying to recover from the effects of foreclosure and declining property values,” said Congressman Cohen. “With the assistance of state and local government, this money will be put to work immediately in communities and neighborhoods in Memphis and Shelby County with the greatest need. This housing crisis is affecting every sector of our economy, and this money will go a long way toward helping to stop the bleeding in the most vulnerable neighborhoods.”
Congressman Cohen added, “The funding is provided through HUD’s Community Development Block Grant (CDBG) Program under the Housing and Economic Recovery Act of 2008, which I proudly supported when it came to a vote on May 7, 2008. These targeted funds will be used to purchase foreclosed homes at a discount and to rehabilitate or redevelop them in order to respond to rising foreclosures and falling home values.”
State and local governments can use their neighborhood stabilization grants to acquire land and property; to demolish or rehabilitate abandoned properties; and/or to offer down payment and closing cost assistance to low- to moderate-income homebuyers (household incomes not exceed 120 percent of area median income). In addition, these grantees can create “land banks” to assemble, temporarily manage, and dispose of vacant land for the purpose of stabilizing neighborhoods and encouraging re-use or redevelopment of urban property.
“The housing and credit crises are impacting all of us,” added Congressman Cohen. “Families who lose their homes are directly impacted, but their former neighbors have also seen their homes lose value. These losses are compounded in the complicated financial structures created by Wall Street and affect banks’ abilities to lend money and raise capital. This program is part of a comprehensive approach that includes last week’s economic rescue bill which we hope will help end this crisis and get our economy back on track.”
The housing crisis has had a significant impact in Tennessee. One in 36 homeowners is projected to lose their homes to foreclosure over the next two years. Homeowners who do not lose their homes have also been hurt by their homes’ declining value. The Pew Charitable Trusts estimates that a quarter of all Tennessee homeowners will feel the ripple effects of the housing crisis, which could also cost the state and local tax bases as much as $1 billion.
Metro Memphis’ foreclosure rate hit 2.1 percent in 2007, and is increasing rapidly as the credit crisis restricts lending by financial institutions. With the rising number of foreclosed properties in individual neighborhoods, the number of vacant homes is on the rise as well, which is leading to the occupied homes losing their value as well, creating a downward spiral.
In determining the allocation of funds, HUD followed Congress’s direction that grants be targeted to areas based on the number/percent of foreclosures, subprime mortgages and mortgage defaults and delinquencies. HUD took a data driven approach to this process, relying on numerous data sets from government agencies and private sources.
HUD also will issue specific rules that will assist communities in the administration of this new program and to ensure, as Congress directed, that these grant funds be obligated for specific activities within 18 months. This Congressional timetable may present challenges to state and local governments undertaking ambitious, and in some cases unprecedented, acquisition and rehabilitation activities. Meanwhile, HUD is actively encouraging local governments receiving direct grants to coordinate with each other, and with their state governments, to make most effective use of available funds.
The NSP Program also seeks to prevent future foreclosures by requiring housing counseling for families receiving homebuyer assistance. In addition, the Agency seeks to protect future homebuyers by requiring States and local grantees to ensure that new homebuyers under this program obtain a mortgage loan from a lender who agrees to comply with sound lending practices.
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Contact:
Marilyn Dillihay, Press Secretary, 202-225-3265
Charlie Gerber, Communications Assistant, 202-225-3265
