Funding

$15 billion ($7.5 billion for loans, $7.5 billion for grants) to States.

$3.92 billion (CDBG funds) to CDBG entitlement jurisdictions.

Formula

Each State’s loan and grant authority is based on the State’s percentage of nationwide foreclosures and the number of subprime loans delinquent over 90 days over the last four calendar quarters, adjusted by a HUD-established index to account for the State’s relative median home price.  However, the median home price factor may not increase any State’s share by more than 25%.

HUD to develop the funding formula based on—in each entitlement jurisdiction—the number and percentage of (1) home foreclosures, (2) homes financed with subprime loans, and (3) homes in default or delinquency.

Suballocation Requirement

States must allocate grants and loan authority to the 100 largest cities and 50 largest urban counties in the nation, as well as any city over 50,000 with a foreclosure rate at or above 125% of the statewide rate, based on relative foreclosure and subprime loan delinquency rates.  However, if a suballocation would be less than $10 million, the State may allocate less than that amount to the city or county.

Not applicable

Loans

Non-recourse and zero-interest. The federal government would be paid back from resale or refinance proceeds. Loans for homeownership properties must be repaid within 3 years. For rental properties, the maximum loan term is 5 years. In addition, the federal government would receive a percentage of any appreciation a property owner realizes at resale. 

Not applicable

Eligible Uses: Loans

For acquisition and rehabilitation costs for owner-vacated, foreclosed properties for resale or rental.

Not applicable

Eligible Uses: Grants

For property taxes and insurance during the pre-occupancy phase; operating costs such as property management fees; administrative and planning costs; incidental costs involved in acquiring qualified foreclosed housing such as reasonable closing costs; and rehabilitation costs (limited to 20% of allocation).

May be used to demolish foreclosed housing that is deteriorated or unsafe, but only if HUD determines that the area in which the housing is located has a high incidence of vacant and abandoned housing and is experiencing a significant population decline. However, funds may not be used to demolish any public housing.

To (1) establish funding mechanisms to purchase and rehabilitate foreclosed properties, such as soft seconds, loan loss reserves, and shared-equity loans; (2) purchase and rehabilitate abandoned and foreclosed properties for resale or rental; (3) establish land banks for foreclosed properties; and (4) demolish blighted structures.

Income Targeting

Homes purchased for resale must be sold to families at or below 140% of area median income (AMI). Rental properties must serve families at or below AMI. At least 50% of the grant money must be targeted to house families at or below 50% of AMI, and not less than half of this money must target families at or below 30% of AMI (HUD may waive the latter requirement).

For families at or below 120% of AMI, with 25% of funds to house families at or below 50% AMI.