The North Carolina Department of Commerce announced the full list of recipients for the state’s NSP grant program. In all, the state awarded $48.85 million to mitigate foreclosures in the state.  The funds come from HUD.  Nationally, approximately $4 billion was allocated to the program.

At a time when the Federal Reserve is printing one billion dollars every hour in new money, putting only $4 billion on foreclosures seems like a huge mis-allocation.  For North Carolina, with the nation’s tenth largest population, the funds will be useful but more certainly could have been utilized.  In fact, Commerce received more than $100 million in requests for its NSP funds.

Just think how much we could spend to repair our neighborhoods if we could get bonuses like those executives at AIG.  Even if we don’t know how to make a huge money losing bet on a credit default swap.

Wake County is the big winner.  It took home a bit more than 20 percent of all funds granted by the state.  Both the City and the County were awarded their own grants.  As well, Passage Home and St. Augustine’s College CDC (no web page) each received more than $2 million.  The two non-profits both plan to put the money into the Southeastern Raleigh area, a neighborhood that border’s on downtown Raleigh and its convention center.  It appears that the City also intends to put its funds in that area.  This would do a lot to shore up the capital, although the capital is hardly reeling.  In fact, a report out today shows that the Raleigh-Cary MSA is the leading city in the country for in-migration, sparked by the availability of good jobs in government and technology.

Some of the large metro areas were largely shunned. The City of Durham received $2.1 million.  Non-profits and the City had applied for approximately $5 million. At CRA-NC, our project was turned down.

Lexington and Gastonia and Henderson, all relatively small cities, each got $2 million.

For those who are shut out, some of the intermediary funding could still be a savior.  The North Carolina Community Development Inititiative got $3.5 million.  It will re-allocate a portion of those funds.  The North Carolina Housing Finance Agency got $4 million.  Self-Help Credit Union, one of the state’s most successful development agencies with operations in metro areas in most of the “greatest need” areas, only got $2.5 million.

Self-Help plans to use the money to create loan opportunities for families that want to buy these properties after they are redeveloped.  This is a different strategy, and one that should serve to enhance Self-Help’s balance sheet.  There loans will come with some guarantees, they will receive interest on their loans, and they will be collateralized.  Other recipients will spend their funds, Self-Help will add the money to its working assets.

The North Carolina Division of Community Assistance held a meeting yesterday in Greensboro to help cities, counties, and non-profits with their NSP applications.  The NSP is a federal program, administered through HUD, that enjoins these groups to fight the foreclosure crisis in their communities.  HUD has allocated $3.92 billion.  Approximately $57 million will go to North Carolina, including $12 million for non-profits.

What is emerging is that in North Carolina, the NSP will be designed in such a way that only a narrow set of strategies can qualify.

The criteria are especially daunting for non-profits.  There will be no land banking, for example.  This is one of the ideas supported by one of North Carolina’s largest non-profit housing developers and credit unions, Self-Help.

[polldaddy poll=1062393]  Moreover, all funds must be recaptured.  What does that mean?  Well, if DCA grants a county $200,000 to do infill redevelopment of blighted property, the following scenario would emerge:  The county might partner with a non-profit on redevelopment.  Say the property was made into a multifamily rental and resold for $225,000.  The non-profit would be able to take its costs of management out, but it would have to return what was left of the $225,000 after those costs.

Last, non-profits have to meet more stringent tests for population served.  The HUD regs are written to require that at least half of all residents served by any grant are at incomes at or below 50 percent of area median income.  That is a tough test, all by itself.  It pretty much guarantees that most projects are going to be for rental housing.

Non-profits in North Carolina will have to go one more step.  100 percent of residents in non-profit projects must have incomes at or below 50 percent of AMI.

Last, although anyone is eligible, it looks like only twelve counties are “competitive.”  All twelve are east of Winston-Salem.  Folks from Buncombe County were not happy when they heard about that at yesterday’s meeting.

It seems likely that the NSP in North Carolina is going to be have requirements that make it most amenable for supportive housing.

Cities and counties are now working as fast as they can to get their applications in for Neighborhood Stabilization Program (NSP) grants.  The deadline in North Carolina to file a letter of intent is November 3rd.  Its a short turnaround.

This is a program that is designed to help communities develop strategic plans to counter home foreclosures.  In North Carolina, there is $52 million available.  About one-quarter of that money has to go specifically to non-profits.  There is also another $5.4 million set aside just for Charlotte.  The applicant counties or cities are allowed to keep five percent of any allocated funds for their own administrative needs.  While it sounds like a lot of money, its not nearly enough to handle the problem.  In most cases, cities and counties will have to make a decision on where to triage the crisis.

If you are wondering who in your community has the ability to apply for these funds, the North Carolina list is right here. The national list is available from this site.

Another issue is the complexity of the application.  Applicants have to identify the location of subprime loans, of defaults and delinquincies, and of foreclosures, in their communities.

It will be interesting to see how many applicants are able to provide that data, in less than a few weeks.

The money must go to programs that buy property that is going into foreclosure, into sales in lieu of a foreclosure, or that is blighted.  Condemned properties would qualify.  There is creative room to find ways to use funds to restore infrastructure.  There is a criteria that requires that one-quarter of the beneficiaries of a project must be low-income.

It seems possible that this money could be utilized by an enterprising City or County to buy and rehabilitate a distressed mobile home park.  Certainly, there would be the chance to help LMI families.  One of the challenges of any multiple housing unit intervention is finding a way to negotiate with multiple lien holders, trustees, and servicers.  Mobile home parks might be relatively easy.  The land is probably going to be on one mortgage.  Repairs for park infrastructure would qualify, too!