February 16, 2011; Source: U.S. Department of Housing and Urban Development | NPQ readers asked what happened to the Neighborhood Stabilization Program in the proposed federal budget. From looking at the budget proposal itself, it isn’t clear. In the formal budget, the term “Neighborhood Stabilization” doesn’t appear (PDF).

There is $168 million for homeownership and foreclosure counseling, more than half of that total dedicated to foreclosure prevention and mitigation assistance, presumably to be delivered through the widely respected counseling programs offered by NeighborWorks. There is also money in the budget for Federal Housing Administration homeownership financing geared toward making homeownership available for moderate income households that might be otherwise facing foreclosure in the private mortgage markets.

But there is nothing in the budget called Neighborhood Stabilization. HUD’s separately issued fact-sheet on foreclosure-related programs in the proposed FY2012 budget says that HUD is requesting $88 million for housing counseling assistance, which may be the non-foreclosure assistance, with NeighborWorks receiving the remainder of the counseling total cited in the formal budget proposal. The last third of the two-page foreclosure fact sheet is devoted to the Neighborhood Stabilization Program, citing the $7 billion allocated over three rounds of NSP funding, including $1 billion made available in September 2010.

That there is no reference to an NSP appropriation for FY2012, suggests that the Administration may well be waiting for the current unspent funding backlog to lessen before being able to make a pitch for another appropriation. Or perhaps, when foreclosures again spike, as has been predicted later in 2011, perhaps that will provide the justification for another supplemental budget request for funds to acquire, redevelop, or demolish vacant foreclosed properties.

Hopefully the nation won’t wait until homeowners (and tenants) are tossed out of their homes in foreclosure actions, but will put more money into foreclosure mitigation and prevention counseling through NeighborWorks – plus tougher mechanisms to force banks and servicers to the table to make substantial modifications in principal and interest.—Rick Cohen