December 27, 2007
Contact: Douglas Robinson, 202-220-2360, drobinson@nw.org;
Erin Angell, 202-220-6317, eangell@nw.org
NeighborWorks® America Receives Appropriation to Provide Grants for Mortgage Foreclosure Mitigation Counseling
FREQUENTLY ASKED QUESTIONS
Q – What is the amount of this appropriation?
A - Congress approved and the President signed a bill that provides $180 million to Neighborhood Reinvestment Corp. (DBA as NeighborWorks America). These funds are available until expended, and are divided as follows:
- up to $5 million can be used to build mortgage foreclosure and default mitigation counseling capacity of housing counseling intermediaries and their partners through training.
- at least $167.8 million will be made available in grant funds
- no more than 4% of the total can be used for NeighborWorks administrative expenses to carry out activities defined under the legislation, including a study to identify successful strategies and methods for preserving homeownership and the long-term affordability of at-risk mortgages; recommend efforts that will or likely can assist in the success of this program; and analyze policy and procedures that failed to result in successful mortgage foreclosure mitigation.
Q – How is NeighborWorks America planning to distribute these funds?
A – Grant funds: NeighborWorks America will manage a competition to provide grants to HUD-approved housing counseling intermediaries and state Housing Finance Agencies (HFAs). Eligible applicants with demonstrated experience in foreclosure mitigation counseling are encouraged to apply for grants. Individual homeowners facing foreclosure are not eligible for these grant funds; however, they will benefit from the increased availability of housing counseling services these funds will offer.
Training: NeighborWorks America will train foreclosure counselors across the country through a combination of multi-course, weeklong trainings; specialized place-based foreclosure counseling courses; and the development of an on-line Foreclosure Basics course.
Q – Is $180 million enough?
A – There is a tremendous need and growing demand for foreclosure mitigation counseling, a service which is more urgent, more labor-intensive, and requires more specialized skills than pre-purchase counseling. This appropriation is timely and will significantly contribute to the availability of needed foreclosure counseling services, but it is only one facet of the solution. NeighborWorks® America commits itself to administer these funds fairly, competitively, and transparently so they may be of greatest assistance to communities of need.
Q – How do qualified organizations apply for a grant?
A – All organizations and agencies that are eligible for these grant funds have already been notified of their eligibility. Eligible applicants are HUD-approved housing counseling intermediaries and state Housing Finance Agencies that have demonstrated experience in providing foreclosure counseling services. Local housing counseling organizations are not eligible to apply for these funds directly; however, they may receive pass through funding from a HUD-approved housing counseling intermediary or HFA. Individual homeowners facing foreclosure are not eligible for these grant funds, but they will benefit from the increased availability of housing counseling services in areas of greatest need.
Q -- How many people does NeighborWorks America expect will receive services from non-profit organizations through this appropriation?
A – Tens of thousands. Every applicant will submit a plan which will include goals regarding the number of homeowners they will be able to assist with these funds. NeighborWorks America will be better able to estimate the amount of people these funds will help once applications have been reviewed and awards are made.
Q – Why does NeighborWorks America think that it was singled out to be the administrator of such a large foreclosure mitigation program?
A – The Neighborhood Reinvestment Corporation was chartered by Congress in 1978 and is funded each year with a direct Congressional appropriation. NeighborWorks America is in the unique position to be able to receive a federal appropriation in a timely manner, and its statute allows it to make grants and to do so quickly. In the Conference Report that accompanied the legislation, the Appropriations Committees noted NeighborWorks’ capacity to administer the competition for the funds rapidly and facilitate help for homeowners almost immediately.
Q – Has NeighborWorks America appointed a special grant-maker or otherwise restructured its operations to manage the appropriation?
A – NeighborWorks America has been training housing counselors and community development professionals and making grants to its network organizations and to the broader community development field for thirty years. NeighborWorks is building upon the systems and infrastructure it already has in has in place to deliver the necessary training, grant making, and evaluation.
Q – How long will it take NeighborWorks America to distribute these grant funds?
A – NeighborWorks America will award at least $50 million to areas of greatest need within 60-days, with the balance to be awarded subsequently. Funds will remain available until expended.
Q – What portion of these funds are likely to be distributed outside of the organizations that are part of the NeighborWorks network?
A – The Appropriations Committee has directed NeighborWorks America to make at least $140.8 million in grant funds available to HUD-Housing Counseling Intermediaries and HFAs, both of which are outside of the NeighborWorks network. All of the training offered under this appropriation will be available to practitioners without regard to their affiliation with the NeighborWorks network. Details on grants and training success will be available in the bi-annual report to the House and Senate Committees on Appropriation as well as to the House Financial Services Committee and the Senate Banking Committee.
Q – Your website shows that at least six new positions related to foreclosure training are open at NeighborWorks America as of December 14. How much of the $180 million of the appropriation is NeighborWorks America going to retain for its own administrative needs?
A – No more than 4% of the total can used for NeighborWorks’ administrative expenses to carry out activities defined under the legislation, including a study to identify successful strategies and methods for preserving homeownership and the long-term affordability of at-risk mortgages; recommend efforts that will or likely can assist in the success of this program; and analyze any policy and procedures that failed to result in successful mortgage foreclosure mitigation.
Q – Are there income restrictions on who can be helped?
A – The funds will help homeowners (not investors) facing foreclosure. While there is no explicit income restriction in the legislation, the majority of the funds will be directed to areas of greatest need, which are typically economically depressed areas or areas where there is a prevalence of sub prime loans. Sub prime loans are not typically made to individuals with high incomes. It is important to remember that a foreclosed home scars a neighborhood, and communities suffer from foreclosure regardless of the incomes of those whose homes are lost to foreclosure.
