A Look at the Neighborhood Stabilization Program (NSP) in the Fourth District States

The Neighborhood Stabilization Program, or NSP, is a federal program aimed at helping communities recover from the foreclosure crisis. To track the program here in the Fourth District, the Cleveland Fed partnered with the National Vacant Properties Campaign and the Federal Reserve Bank of Richmond on a series of case studies aimed at learning how smaller towns, rural counties, and suburban neighborhoods were implementing the NSP program. What are the community impacts from foreclosed and vacant homes in these markets, and what special challenges do smaller communities confront (for example, lack of staff capacity and limited resources)? Have these communities responded with creative strategies for overcoming these challenges and the complexities of the NSP program? Finally, since most rural counties and small towns must access NSP resources through their states, what role do state housing and community development agencies play, and should that role be different? The case study report, which focuses on four communities--the Northern Shenandoah Valley and Fayette County in Pennsylvania, Charleston County, South Carolina, and Cuyahoga County, Ohio--will be published in early 2010.

Administered by HUD, NSP is a component of the Community Development Block Grant (CDBG). In the first phase of the program, called NSP 1, HUD allocated $3.92 billion to 309 grantees across the country, including some 55 states and territories and 254 selected local governments and organizations. While NSP grantees developed their own programs and funding priorities (to view examples, see "NSP plans" at right), they must follow guidelines and some requirements for spending the dollars.

For example, NSP grantees are required to use at least 25 percent of the funds for the purchase and redevelopment of abandoned or foreclosed homes or residential properties that will be used to house individuals or families whose incomes do not exceed 50 percent of the area median income. Eligible uses include but are not limited to (see complete guidelines):

In tandem with the case studies noted above, the Cleveland Fed visited the 10 communities indicated on the map. Mouse over the geography for demographic data on each; a link at the bottom of the data boxes will take you to a written summary that touches on that community's foreclosure-related challenges as well as opportunities for using NSP funds to move beyond the crisis.

Population, unemployment, income, and vacancy data were culled from the U.S. Census Bureau's 2006-2008 American Community Survey 3-Year Estimates

Data for county-wide sheriff sale referrals were made available by the individual counties.

County-wide foreclosures volumes are from Policy Matters Ohio, "Foreclosure Growth in Oho 2009," March 2009.