The House of Representatives has approved legislation to axe a bailout program for lenders and real estate speculators. The legislation, HR 861, the NSP Termination Act ends the so-called Neighborhood Stabilization Program (NSP).
“Today the House acted yet again to end wasteful spending on a government program that does nothing to help homeowners facing foreclosure," said Financial Services Committee Chairman Rep. Spencer Bachus of HR 861. "In fact, this program creates perverse incentives for banks and other lenders to foreclose on homeowners. This program is not only bad for struggling homeowners; it’s horrible for taxpayers, too. It uses taxpayer money to bail out lenders and real estate speculators. We simply cannot continue to use taxpayer dollars to bailout those who made bad decisions.”
The NSP provides taxpayer dollars to state and local governments, as well as non-profits, to purchase, rehabilitate, and resell foreclosed properties. Yet, giving these entities taxpayer dollars to buy foreclosed properties does nothing to help struggling homeowners stay in their homes. In fact, the program represents a costly bailout of lenders, servicers, and real estate speculators who made risky bets on the housing market and will now dump their foreclosed property onto the taxpayer.
The NSP has had nothing but problems since its creation in 2008. The Inspector General of the Department of Housing and Urban Development has identified several misuses of NSP money at the state level. The Government Accountability Office questions whether HUD has the capacity of properly tracking the use of funds provided under this program. The NSP has received more taxpayer funding even though it was supposed to be a temporary program. The NSP was provided $4 billion at its inception in 2008, $2 billion more in 2009, and another $1 billion as part of the Dodd-Frank Act in 2010.