Program Revamped to Benefit REO Properties for Sale

The U.S. Department of Housing and Urban Development (HUD) has scrapped the Neighborhood Stabilization Program designed to rehabilitate REO properties for sale in Mississippi. Instead, the HUD diverted the funds into a program that would greatly benefit foreclosed homes in the Jackson metropolitan area.

The scrapped $43 million program would have given $8 million to Desoto County to rehabilitate REO properties for sale. Three Rivers Planning and Development District executive director Randy Kelley said that the scrapped program would have provided funds to all 82 counties in Mississippi to combat the spread of foreclosure properties in the area.

Kelley explained that the original plan calls for the use of $43 million federal funds to rehabilitate foreclosed homes through a partnership between private and public sectors. He said that the program failed in terms of its application statewide, adding that HUD changed several provisions that made the program not viable for implementation.

He pointed out that about half of the total grant would have been allocated to Desoto County for the rehabilitation of repossessed properties in the area.

Under the program, foreclosed properties would have been sold at lower prices and those who are interested in buying would be required to enter into lease-purchase agreements and gain equity for at least 25 years or up to 33 years. The program would have allowed the reversion of payments into a conventional mortgage.

The DeSoto County Board of Supervisors has expressed concerns over the program arguing that it would turn public entities into private stakeholders. Under the program, local government units and developers would have the opportunity to buy REO properties for sale from banking institutions.

However, Kelley said that the stabilization program did not receive complete approval from HUD. As a result, the HUD decided to scrapped the program and divert the funds elsewhere.

The new plan involves the allocation of $20 million for the renovation of foreclosed houses in the Jackson metropolitan area and another $20 million to help the low-income housing program of the Mississippi Home Corporation.

Meanwhile, DeSoto County received a federal grant amounting to $250,000 under the Home Grant Program. The grant was made possible by the Mississippi Development Authority which provides as much as $28,750 to low-income, first-time homebuyers of REO properties for sale.

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