Gov. Rell wants to tap into fund to resell, redevelop foreclosed homes [updated]

Seven large cities are targeted, but Gov. Rell says she plans other ways of helping small towns.

[Editor's Note: Link to gov. Rell's draft plan has been corrected.]

Gov. M. Jodi Rell today announced a draft plan to allocate more than $25 million in federal funds to help communities respond to the national foreclosure crisis.

The federal funding is part of the Housing and Economic Recovery Act of 2008.

Under the bill, the U.S. Department of Housing and Urban Development crafted the Neighborhood Stabilization Program (NSP), which provides emergency grants to states and some cities to buy foreclosed homes and then rehabilitate, resell or redevelop those homes to stabilize neighborhoods and ensure that surrounding homes maintain their value.

Each state must submit an action plan to HUD by Dec. 1 to receive Neighborhood Stabilization Program funds.

Connecticut’s Department of Economic and Community Development (DECD) took federal requirements and local factors into consideration in determining the cities in greatest need.

The public has 15 days to comment on Connecticut’s Neighborhood Stabilization Program application to HUD. The draft can be viewed here.

Comments can be emailed to NSP.Comment@ct.gov until Nov. 21, 2008.

After reviewing the comments, DECD may make changes before submitting the final plan.

“Our cities are bearing the brunt of this crisis and these funds will go a long way in helping some of the hardest-hit areas,” Rell said.

“Seven of our urban centers account for more than 25 percent of Connecticut’s foreclosures and pre-foreclosure actions. These funds will have a lasting positive impact in these communities, as they will ensure up to 400 units of housing will be acquired for rehabilitation and redevelopment, rather than sitting empty,” she said.

The plan is to allocate $6 million to Bridgeport; $3,566,000 to Waterbury; $3,320,000 to New Haven; $2,977,000 to Stamford; $2,805,000 to Hartford; $1,826,000 to Meriden; and $1,823,300 to New Britain.

Another $2.1 million is proposed to reward communities that exceed standards for timely performance

The remainder will help fund technical assistance and program administration.

“We have no intention of leaving Connecticut’s other communities without help,” Rell said.

“I am asking that Neighborhood Stabilization Program rules and guidelines be temporarily extended to the Small Cities Community Development Block Grant Program for the next two federal fiscal years, so that every community can receive the assistance it needs.”

Each year, Connecticut receives approximately $13 million under the federal Small Cities Program.

Another 22 cities and towns receive more than $27 million directly from HUD.

The change Rell is asking for would allow cities and towns that receive grants through the Small Cities program administered by DECD to address foreclosed properties in their communities.

Helping communities stabilize neighborhoods affected by foreclosures is only a part of Connecticut’s response to this crisis. In November 2007, the governor unveiled a $50 million “CT FAMLIES” program that allows homeowners – stuck in subprime mortgages and unable to make their payments – to refinance their loans with the Connecticut Housing Finance Authority at a fixed rate.

For More Information: http://mansfield.htnp.com/news/federal_funds_re_foreclosures.html