FLORENCE – The federal Neighborhood Stabilization Program (NSP3) was developed to help stop the growing list of foreclosures across the nation. The goal of the program is to target emergency assistance to state and local governments that will allow them to acquire, redevelop or demolish foreclosed properties.
Earlier this year, Pinal County was allocated $3.16 million in the third round of funding from the program. Following public input and supervisor approval, the money was targeted for three areas in the county.
“While $3.16 million is a great deal of money, it isn’t enough to spread throughout the entire county and still be effective,” said Adeline Allen, Pinal County’s Housing and Community Development Director. “Our strategy is to target four areas of the county that we feel are in the greatest need of funds and meet Housing and Urban Development’s (HUD) strict criteria.”
Neighborhoods in Apache Junction, Coolidge and Casa Grande were selected for use of the funds. The neighborhoods chosen are small and relatively compact in order for the NSP3 funds to make a positive impact.
Allen said there are four goals of this third round of funding:
• Attracting owner-occupants to target areas, including middle-income households
• Increasing the homeownership rate and leveraging opportunities for private lending
• Redeveloping and reoccupying vacant properties
• Improving properties and property values, thereby also stabilizing the tax base
Patricia Farnworth, the program’s coordinator for Pinal County Housing, said the money received from NSP3 will be used in various ways to make homeownership affordable.
These homes must be owner-occupied and the owner’s primary residence,” Farnworth said. “We are employing four different mechanisms to distribute the funds: down payment assistance, rehabilitation help, closing costs and a direct loan to the borrower.”
The first mortgages through the bank are make-sense loans to be paid back. The money Pinal County contributes is a zero interest loan that is forgivable as long as the participant complies with the program.
Pinal County intends to use some of the NSP3 funds to purchase four or five lots in Apache Junction and partner with an organization to build homes on those lots.
To qualify for the NSP3 funds, HUD looks at Pinal County’s median income level and uses that as a base figure for the income of the borrower along with all family members living in the home. There are two levels for qualification. Level 1 has two categories -- very low income below 50 percent of median (this equates to a family of four earning less than $32,750) and low income below 80 percent of median (this equates to a family of four earning less than $52,400). Level 2 is a moderate income below 120 percent of median (this equates to a family of four earning less than $78,600).
As of December, two houses in Coolidge are now occupied due to the NSP3 funds.
“So far, we have closed on two homes with three more pending,” Farnworth said. “The 20 percent down payment greatly increases opportunities for first mortgage approval. Without this assistance, most of these buyers would have no other options.”
The assistance provided to these new homeowners included help on the 20 percent down payment, $5,000 toward the closing cost of the home and some funds to help rehabilitate the domicile. Before the potential owners receive the money, they must first go through an eight -hour training provided by HUD-certified counselor.
“One of our home buyers was very pleased he took the HUD course,” Farnworth said. “He told me that the course prepared him for the entire process. He was confident that he understood the documents he signed with the title company and felt comfortable with his decisions.”
Farnworth explained that the process of finding foreclosed homes that meet HUD requirements for the loans is not an easy task.
Individuals work with independent realtors to locate qualified homes based on the maps, lender-owned status, and vacancy status. Challenges include investors making offers to close more quickly than we can because they do not need a 90 day vacancy like we do and what appears to be a possible increase in short-sales/decrease in foreclosures.
“This program will be successful for Pinal County,” Farnworth said. We have almost 70 applicants looking to become eligible for the program. If we can get them into a home, it’s a win-win situation. We take a foreclosed home off the market and occupy it with owners who will be able to live their American dream.”