Housing and Economic Recovery Act of 2008 (HERA) Programs
(Public Law 110-289, approved July 30, 2008)
HOPE for Homeowners
HERA established the HOPE for Homeowners program, under a new section 257 of the National Housing Act. HOPE for Homeowners is a voluntary program to help borrowers having difficulty paying their mortgages to refinance into FHA-insured mortgages they can afford. Existing first lien holders will "write down" the size of the mortgage to a maximum of 96.5 percent of the home's new appraised value. The borrower will then be able to hold and pay down a 30-year fixed-rate mortgage with payments at or below 38 percent of their monthly income. Existing subordinate lien holders must be willing to "write off" subordinate mortgages in their entirety. To be eligible for HOPE for Homeowners assistance, borrowers must meet certain criteria, including that a borrower’s mortgage must have originated on or before January 1, 2008, the borrower cannot afford the borrower’s current home loan, the borrower has mortgage debt-to-income of at least 31 percent, and the borrower must have not intentionally defaulted on any substantial debt. HERA provides for the program to sunset on September 30, 2011,precluding HUD from entering into any commitment to insure any eligible mortgage after that date.
Administering Office: Assistant Secretary for Housing-Federal Housing Commissioner, U.S. Department of Housing and Urban Development, Washington, DC 20410-8000.
Neighborhood Stabilization Program (NSP1)
HERA established the Neighborhood Stabilization Program (NSP) and appropriated $3.92 billion in funding (commonly referred to as NSP1) for emergency assistance grants to states and units of general local government to purchase and redevelop foreclosed and abandoned homes and residential properties. NSP is a component of the Community Development Block Grant (CDBG) program, and CDBG requirements govern unless waived.
NSP1 funds may be used to: establish financing mechanisms for purchase and redevelopment of foreclosed homes and residential properties; purchase and rehabilitate homes and residential properties abandoned or foreclosed; establish land banks for foreclosed homes; demolish blighted structures; and redevelop demolished or vacant properties. NSP1 grants are awarded on a formula basis to state, local, and territorial governments.
Under NSP1, grantees have 18 months from the date HUD signed their grant agreements to obligate these funds and four years to expend grant awards.
Administering Office: Assistant Secretary for Community Planning and Development, U.S. Department of Housing and Urban Development, Washington, DC 20410-7000.