GAO interviewed representatives from 18 grantees and conducted site visits with an additional eight. To meet the 25% VLI set aside requirement, most grantees planned to acquire, rehabilitate and rent multifamily properties. They described several challenges in carrying out their NSP1 plans, especially competition from private investors able to outbid grantees, pay with cash, or avoid government due diligence, enabling them to acquire properties faster. Two grantees found it difficult to identify foreclosed multifamily properties to purchase.
In April 2010, HUD expanded the definition of “foreclosed and abandoned” property. Specifically, the standards for “abandoned” were loosened so that NSP1 could assist tenant-occupied buildings as long as the owner essentially had abandoned the property by not paying the mortgage or taxes for at least 90 days, the code enforcement process determined that the property was no longer habitable, or the owner had not taken corrective actions for 90 days (see Memo, 4/9/10). HUD field staff reported to GAO that this modification enabled some grantees to more readily acquire multifamily properties and thus meet the 25% VLI obligation.
Read GAO’s report, “Neighborhood Stabilization Program: HUD and Grantees Are Taking Actions to Ensure Program Compliance but Data on Program Outputs Could Be Improved,” at: http://www.gao.gov/new.items/d1148.pdf