House Votes Down NSP3
Posted by Matthew Brian Hersh on March 17, 2011
The Republican-controlled House voted to eliminate the $1 million allocated by the third round of Neighborhood Stabilization Program funds this week, and while the NSP Termination Act is unlikely to pass the Democratically-controlled Senate, much less stand a chance in the face of a presidential veto, it’s yet another move by the House to end foreclosure programs enacted by previous Congresses.
The House is expected to vote down HAMP (The Hamp Termination Act) and the Senate will now consider NSP, FHA Refinance Program, and Emergency Mortgage Relief Program Termination Acts.
HAMP, as we know, did not produce the 3 to 4 million modifications as initially forecast by the administration, largely because it was an incentive program that was never intended to be the silver bullet that killed the foreclosure crisis, as Diane Standaert and Sara Weed wrote in Shelterforce.
But with the NSP Termination Act, which would not affect NSP1 or NSP2, we see the House attempting to end a program that has produced significant dividends in the face of the post-bubble housing environment.
NSP was slotted into the Dodd-Frank Wall Street Reform and Consumer Protection Act last year, bringing the total NSP funds to about $7 million with $3.92 billion as part of HERA in 2008, $2 billion more in ARRA in 2009, and now this latest round.
NSP was obviously small change, especially in light of recent estimates that we’ll see over 8 million foreclosures begun and millions more homes lost by 2014, as we noted in our Fall 2010 article, NSP at Halftime:
“In the face of these daunting numbers, housing counselors, community development corporations, affordable housing developers, and state and local governments around the country, especially in the hardest hit areas, rallied. In 2008 the task, while big, appeared straightforward: some of us would step in between the borrowers in trouble and their lenders to facilitate mortgage modifications. The rest would recover lost properties and rescue communities….[but] the task was gargantuan: larger, more widespread, and more complex than many of us realized when we first began to mobilize our resources.”
And while there were noted criticisms, including limited capacity among some grantees (more successful were consortia), changing requirements, competition from investors in acquiring REO, and the availability of REO in general, as noted by Craig Nickerson and Annie Carvalho, in their recent NSP critique in Shelterforce. That said, there were significant bright spots when it came to NSP: from Cleveland, which connected NSP funds with its Reimagining a More Sustainable Cleveland initiative, to smaller-scale projects in Rhode Island, to Dayton, Ohio.
It’s important to continue to track the successes and deficiencies of existing NSP programs, but to also acknowledge that the House, in slashing $1 billion from a worthy program, only amplifies that these actions are less in the way of the esprit de corps of the House majority and its purported mandate to cut budgets for fiscal restraint, but rather an attempt to undermine programs that don’t conform to certain philosophical aims of the majority. Ask how $1 billion would make a dent in the federal deficit. Then ask how $1 billion would affect foreclosure-ravaged communities.