2. NSP Overview
NSP was created through the
Housing and Economic Recovery
Act of 2008 (HERA)
Amended through the American
Recovery and Reinvestment Act of
2009 (ARRA)
Initially funded with $3.92 billion
(NSP 1)
$2 billion of additional funds
provided through ARRA (NSP 2)
3. Five Eligible Activities
Establish financing mechanisms for the purchase and
redevelopment of foreclosed upon homes and residential
properties
Purchase and rehabilitate homes and residential
properties that have been abandoned or foreclosed upon
Establish land banks for homes that have been
foreclosed upon
Demolish blighted structures
Redevelop demolished or vacant properties
4. Some Key Provisions
NSP funds can only be used in connection with housing-
-not commercial properties or public facilities
Income Targeting--NSP funds must be used to benefit
families whose income does not exceed 120% of area
median income. Additionally, 25% of all NSP funds (30%
in North Carolina) must be used to benefit families
whose income does not exceed 50% of AMI
5. Some Key Provisions - continued
Purchase Discount - foreclosed-upon properties
purchased with NSP funds must be acquired at a
discount to current market-appraised value. Current
regulations provide that the discount should generally be
15%
Sale of Homes - once redeveloped, previously
foreclosed-upon or abandoned homes must be sold for
an amount equal to or less than the cost to acquire and
redevelop the home (including reasonable developer
fees)
Affordability - homes and residential properties made
available through NSP must follow HOME rules for both
initial and continued affordability
6. Areas of Greatest Need in N.C.
Use of NSP funds restricted to areas of greatest need
23 counties in North Carolina identified by DCA
Alamance, Brunswick, Buncombe, Cabarrus, Catawba,
Cumberland, Dare, Davidson, Durham, Edgecombe,
Forsyth, Gaston, Guildford, Iredell, Johnston,
Mecklenburg, New Hannover, Pitt, Randolph, Rowan,
Union, Vance and Wake
7. Initiative Capital’s Program
Line of credit product available to community
development corporations and other nonprofits
Must be used to acquire and redevelop foreclosed-upon
homes and residential properties
Key product terms:
▫ 12 month term
▫ Maximum loan amount $1,000,000
▫ Can be subordinated to traditional financing
▫ Flexible in order to make projects with the potential for significant
impact work
8. Initiative Capital’s Program - continued
Desired NSP participant developer skill sets –
▫ Ability to target tracts severely affected by foreclosures
▫ Develop a rehabilitation plan that generates the greatest
neighborhood impact using NSP and other resources
▫ Successful and extensive track record in residential rehabilitation
work
▫ Organizational capacity to attract eligible homeowners and sell
foreclosed properties
▫ Experience in management, compliance and reporting of CDBG
funds or other federal funding programs
9. Initiative Capital’s Program - continued
Step 1: Purchase & sale
of ten homes (acquisition
1st mortgage price includes purchase Bank REO
Bank loan: $500,000 discount)
Portfolio
CDC borrows $1
million to Step 2: Contracts for redevelopment of
homes (including priority for inclusion of
purchase, green building technologies, materials
redevelop and sell and systems)
ten foreclosed-
upon homes Contractors
2nd mortgage
Income
Initiative loan: $500,000
Step 3: Sale of redeveloped homes to eligible
Capital income eligible borrowers.
- Sale price will not exceed cost borrowers
of acquisition plus development
costs
- Sale structured to meet HOME
requirements for initial and
continued affordability, as well
as all other program requirements
