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Guest Blogger Judy Jacobson: Making NSP Effective

When Congressman Barney Frank (D-MA) first said that he’d advance legislation to stabilize neighborhoods through the acquisition of foreclosed properties, those of us in Massachusetts working on this issue were thrilled. In Massachusetts we had already organized ourselves into a state-wide task force focused on all aspects of foreclosed properties: acquisition, funding, holding properties for redevelopment, and exit strategies. The task force resulted in products such as a $22 million revolving Neighborhood Stabilization Loan Fund and a statewide lender-owned properties REO clearinghouse that provides a “first look” in conjunction with the National Community Stabilization Trust.

When the Housing and Economic Recovery Act (HERA) passed in July 2008 we were well-poised to put the resources that Congressman Frank had fought for to good use. Or so we thought. Although our focus was simple and direct: support the acquisition and rehabilitation of foreclosed properties by responsible developers and homebuyers, we quickly found ourselves mired in the minutia of federal requirements, policy guidance and frequently asked questions. Following U.S. Department of Housing and Urban Development (HUD) Secretary Shaun Donovan’s appointment, and with Congressman Frank’s help, some of the more problematic Neighborhood Stabilization Program (NSP) rules were modified. But despite the word “Emergency” in the subtitle of HERA, it took over a year for NSP contracts to flow.

Our NSP buyers are now competing with investors with cash shopping the market for foreclosed properties. Whether these investor purchases are sustainable and will contribute to neighborhood stabilization remains to be seen. Clearly our NSP buyers are hamstrung with requirements. Does it really make sense to require a homebuyer of a foreclosed property to send a voluntary acquisition notice – the type of form more appropriately suited for a government acquisition – to the seller? Are we really still talking about whether a property that is transferred by a foreclosing lender to an affiliate still qualifies as “foreclosed”? HERA gave HUD enormous flexibility in implementing NSP with only four sacred cows: fair housing, nondiscrimination, labor standards, and the environment. HUD should quickly convene practitioners on the ground to scour the NSP rules and determine those that can be modified or eliminated.

It’s time to get serious about solving the problem of foreclosed properties and making neighborhood stabilization a reality.

Judy Jacobson is the deputy director and general counsel of the Massachusetts Housing Partnership, a statewide quasi-public agency that provides financial and technical assistance to promote the development and preservation of affordable housing. She can be reached at More information about MHP is available at

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