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The housing market has been in a lot of trouble since it crashed in 2008. With millions of workers losing their jobs and homeowners going into foreclosure at every turn, many neighborhoods were left all but vacant.

The government responded to the troubled market by developing the Neighborhood Stabilization Program (NSP), a program meant to help renovate foreclosed homes andoffer public housing options. Now many organizations around the country are working hard to provide affordable housing to individuals and families in need.

HUD's Neighborhood Stabilization Program (NSP)

The Housing and Urban Development's (HUD) NSP was authorized by Title III of the Housing and Economic Recovery Act (HERA) of 2008 to stabilize communitiesthat have foreclosed or abandoned homes,orcarry some among the 2.5 million nationwide in the foreclosure process. The program authorized $3.92 and$1.93 billion for the NSP1 and NSP2 programs, respectively, and were to be distributed to winning applicants from states, local governments and nonprofitsto renovate homes in their communities.

Thosecommunities thatwon grant money were to:

• Allocate at least 25 percent of the funds for purchase and redevelopment of abandoned or foreclosed homes, which were to be used to house individuals or families whose incomes do not exceed 50 percent of the area median income (AMI).
• Make sure all allocated funds benefit low- and moderate-income people whose income does not exceed 120 percent of AMI.

If used appropriately, the funds would help the communities buy foreclosed properties then resell or rent them at affordable prices, helping thousands of individuals and families.

Communities are Taking Advantage of the Program

Several communities around the country lined up for use of the NSP funds in 2009. For instance, in Sonoma County, Calif., several organizations were vying for NSP funding through the Sonoma County Community Development Commission to help low-income individuals and families - as well as the homeless and veterans - move into affordable housing,as well ashouse mental health patients.

In Colorado's city of Pueblo, $1.87 million was awarded for the purchase and rehabilitation of three abandoned/vacant multi-family buildings to place veterans in permanent, affordable rental housing. Also, the city allocated $1.04 million to assist in the purchase and redevelopment of five "blighted" homes, as well as the rehabilitation and resale of three homes, both of which would be used for households at 120 percent AMI and below.

Many other states and communities around the country have received funds to help revive areas either high in foreclosure or job loss.

A Few Glitches in the System

While the program was created to successfully rehabilitate neighborhoods, some communities have run into problems getting the job done. According to a September CNN article, some problems include:

• Too much red tape: Before state and local governments can see any money, they must tell HUD how and where they plan to use the funds then conduct extensive contractual work with banks and developers. For some organizations, this is more than they're used to handling and is slowing progress toward meeting their 18-month deadline.
• Competition for the properties: Some organizations havestruggled topurchase foreclosed homes becausethey're losing out to private investors. For example, in South Florida, many lenders bypassed government funds that required organizations to pay as low as 2 percent below a home's appraised value, instead opting to work with investors eager to pay lender prices.
• Other requirements: Many of the homes that are actually purchased and rehabilitated don't count toward the requirement that 25 percent of funds must be spent on very low-income families, meaning that some state and local officials are having to target specific neighborhoods, limiting the program's effectiveness.

Solutions on the Horizon

While there have been a number ofissues with the program, there are solutions on the horizon, including NSP-TA, aprogram created in conjunction with NSP1 and NSP2 to provide technical assistance to grantees having problems navigating the process. Also, Enterprise Community Partners, Inc. and other nonprofit groups created the National Community Stabilization Trust, which offers grantees access to foreclosed homes before they hit the market. The trust lined up a $50 million low-interest credit line for granteesto acquire homes.

Ali Solis, senior vice president and public policy and corporate affairs senior executive for Enterprise Community Partners, Inc., noted in a guest blog that the program recently received an additional $2 billion for NSP2.

Since the program is still new, it's hard to gauge the rate of success yet. But with communities actively taking advantage of the program, there's hope that many individuals and families will benefit from new and affordable housing in the months and years to come.

If you're interested in NSP housing options, contact your state housing department for eligibility requirements and availability in your area.

Despite buying a new home and securing a decent mortgage rate of 6.125 (traditional 30-year fixed) in October of 2008, homeowner Janice decided the time was right for her to refinance in February in 2009.

The result was a new rate of 4.875% (same terms as original loan), with no points and reduced closing fees. If Janice is to maintain this mortgage to its full terms the total savings will be close to $50,00o.

Depending on your scenario, refinancing now is an excellent way to save on your mortgage as interest rates are at historic lows.Janice said, "The move just made financial sense, since we [her husband and herself] plan on staying here for at least ten years."

By refinancing her mortgage, Janice is saving over $165 a month. Sure it will take her about two years to break even on the closing costs, but since she and her spouse are committed for the long hall, the expense and effort was well worth it.

Those who are either in an adjustable rate mortgage or can reduce their fixed mortgage rate by a full percentage point should start crunching the numbers to see if refinancing can help them save on their mortgage payments. The calculations and contemplation is as simple as using a great online refinancing calculator to see if paying the upfront fees such as appraisal costs, title transfers and notary public charges is worth the expense of refinancing your current mortgage.

Individuals contemplating refinancing their mortgage first need to address their long term goals to ensure that any steps take are well worth it.

If you are considering refinancing to save money you need to commit to at least five years in your current home, calculate the amount of closing costs and the break even point of the investment and then decide if refinancing your mortgage to save money is the right strategy you and yours.

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