PRESIDENT SIGNS FEDERAL HOME FORECLOSURE RELIEF BILL
On July 30, 2008, President Bush signed into law H.R. 3221, the American Housing Rescue and Foreclosure Prevention Act (Act). The Act is intended to bring additional relief to homeowners in response to the mortgage foreclosure crisis and to help cities and states deal with vacant housing caused by foreclosure.
Of particular interest to cities, the Act provides for the distribution of $4 billion in federal funds for states and local governments to be used for acquisition, rehabilitation, or demolition of foreclosed and abandoned properties.
The Act mandates that the U.S. Department of Housing and Urban Development (HUD) devise a funding allocation formula within 60 days. The funding formula “shall ensure that any amounts appropriated or otherwise made available are allocated to states and units of general local government with the greatest need” based on: (1) the number and percentage of home foreclosures in the area; (2) the number and percentage of homes financed by a subprime mortgage-related loan in the area; and (3) the number and percentage of homes in default or delinquency in the area.
The funds must be distributed within 30 days of HUD’s approval of the new formula. The Act provides that the funds will be treated as community development block grant funds and that no matching funds shall be required.
Because Texas still has a relatively stable housing market, it is unclear how much funding will be available for Texas cities.
The League will monitor the HUD rulemaking, and continue to update the membership on the availability of the funds.