Finance Globe

U.S. financial and economic topics from several finance writers.
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HUD Sends 75% of Stimulus Money to State and Local Agencies

The $787 billion American Recovery and Reinvestment Act 2009, signed into law last week by President Obama, provided $13.61 billion for projects and programs administered by the Department of Housing and Urban Development (HUD).

HUD announced on Wednesday that nearly 75% of those funds - $10.1 billion - has already been allocated to create green jobs, to revive housing markets with a high rate of foreclosure, and curb homelessness.

"I am pleased to announce that we are moving swiftly to get these much-needed funds out to states and cities to create jobs and help stimulate our economy," said HUD Secretary Shaun Donovan. "Recovery Act investments in HUD programs will be not just swift, but also effective: they will generate tens of thousands of jobs, help the families and communities hardest hit by the economic crisis, and modernize homes to make them energy efficient."

Most of the funding is formula-based, meaning that funding provided is based on set program criteria. Eliminating the need for grantees to apply for the funds helps to get the money out there faster, so it can promote job growth sooner.

The remaining 25% of the funds, which will be competitively awarded later, will be used to build on President Obama's priorities "to promote green jobs and mitigate the destabilizing effects of foreclosures on communities."

The money opened up today includes:

$3 billion to develop, finance, and modernize public housing
Money is to go to 3,134 public housing agencies (PHAs) to develop, finance, and modernize public housing in their communities. Local PHAs will use this funding for energy-efficient modernization and to make large-scale improvements to public housing developments, including critical safety repairs. In addition to the funding allocated through this capital fund, HUD is working to competitively award another $1 billion to local housing agencies to support catalytic investments, particularly investments that leverage private sector financing to retrofit public housing and enhance energy conservation.

$255 million for Native American housing
Tribal entities will use this money for energy-efficient modernization and renovation of housing maintained by Native American housing programs. In addition to the formula-based funding, another $242 million will be competitively awarded later this year. $10.2 million is allocated for Native Hawaii Housing.

$100 million to reduce the lead hazard in lower income homes
Money is for HUD's lead based paint and hazard reduction and remediation activities, including promoting local efforts to eliminate dangerous lead from lower income homes and stimulating private sector investment in lead hazard control.

$2.25 billion for affordable rental housing projects
Funded under HUD's HOME Program, Tax Credit Assistance Program (TCAP) grants will help State Housing Finance Agencies to kick-start the production of stalled affordable rental housing projects that rely on Low-Income Housing Tax Credits. These agencies will distribute the funds competitively and give priority to housing projects that can begin construction immediately.

$2 billion to undertake much-needed project improvements to maintain the quality of critical affordable housing
HUD is allocating this money to invest in full 12-month funding for Section 8 project-based housing contracts. This funding will enable owners to undertake much-needed project improvements to maintain the quality of this critical affordable housing.

$1 billion to rehabilitate affordable housing and improve key public facilities under the Community Development Block Grant Program
Approximately 1,200 state and local governments will receive this funding through the Department's Community Development Block Grant (CDBG) program to target their own community development priorities. Most local governments use this investment to rehabilitate affordable housing and improve key public facilities - helping to stabilize communities and create jobs locally.

$1.5 billion to reduce homelessness, and prevent it among those facing a sudden economic crisis
State and local governments will receive this funding to help rapidly re-house homeless persons and families who enter shelters. In addition, HUD's Homelessness Prevention Fund will significantly expand efforts to prevent homelessness among those facing a sudden economic crisis.

A temporary increase to the loan limits of mortgages insured by the Federal Housing Administration (FHA)
HUD will temporarily increase the loan limits of mortgages insured by the Federal Housing Administration (FHA) up to $729,750. This will keep credit flowing to millions of families whose options are limited by the current crisis. Previously, FHA's loan limits in very high-cost areas were capped at $625,500. FHA's reverse mortgage product known as the Home Equity Conversion Mortgage (HECM) will have a new national mortgage limit of $625,500, up from the previous limit of high of $417,000. These increased loan limits are applicable to all FHA-insured mortgage loans endorsed until December 31, 2009.



Sources:
The White House
U.S. Department of Housing and Urban Development
Obama: Overhaul Nation's Regulatory System
A Breakdown of Stimulus Spending
 

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Friday, 23 August 2019

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