Notice of Allocations, Application Procedures, Regulatory Waivers Granted to and Alternative Requirements for Emergency Assistance for Redevelopment of Abandoned and Foreclosed Homes Grantees Under the Housing and Economic Recovery Act, 2008; Revisions to Neighborhood Stabilization Program (NSP) and Technical Corrections, 29223-29229 [E9-14360]

Agencies

• DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Federal Register Volume 74, Number 117 (Friday, June 19, 2009)]
[Notices]
[Pages 29223-29229]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-14360]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-5255-N-02]


Notice of Allocations, Application Procedures, Regulatory Waivers 
Granted to and Alternative Requirements for Emergency Assistance for 
Redevelopment of Abandoned and Foreclosed Homes Grantees Under the 
Housing and Economic Recovery Act, 2008; Revisions to Neighborhood 
Stabilization Program (NSP) and Technical Corrections

AGENCY: Office of the Assistant Secretary for Community Planning and 
Development, HUD.

ACTION: Notice of allocation method, waivers granted, alternative 
requirements applied, and statutory program requirements; revisions to 
Neighborhood Stabilization Program and technical corrections.

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SUMMARY: On October 6, 2008, the Department published a notice advising 
the public of the allocation formula and allocation amounts, the list 
of grantees, alternative requirements, and the waivers of regulations 
granted to grantees under Title III of Division B of the Housing and 
Economic Recovery Act of 2008, for the purpose of assisting in the 
redevelopment of abandoned and foreclosed homes under the Emergency 
Assistance for Redevelopment of

[[Page 29224]]

Abandoned and Foreclosed Homes heading, referred to throughout this 
notice as the Neighborhood Stabilization Program (NSP). This document 
advises the public of substantive revisions to the October 6, 2008, 
notice, primarily as a result of changes to NSP made by the American 
Recovery and Reinvestment Act of 2009. This document also makes a 
number of non-substantive technical corrections or clarifications to 
the October 6, 2008 notice.

DATES: The effective date (except as specified herein) remains as 
published in the Federal Register on October 6, 2008.

FOR FURTHER INFORMATION CONTACT: Stanley Gimont, Director, Office of 
Block Grant Assistance, Department of Housing and Urban Development, 
451 Seventh Street, SW., Room 7286, Washington, DC 20410, telephone 
number 202-708-3587. Persons with hearing or speech impairments may 
access this number via TTY by calling the Federal Information Relay 
Service at 800-877-8339. FAX inquiries may be sent to Mr. Gimont at 
202-401-2044. (Except for the ``800'' number, these telephone numbers 
are not toll-free.)

SUPPLEMENTARY INFORMATION: Title III of Division B of the Housing and 
Economic Recovery Act, 2008 (HERA) (Pub. L. 110-289, approved July 30, 
2008) appropriated $3.92 billion for emergency assistance for the 
redevelopment of abandoned and foreclosed homes and residential 
properties, and provides under a rule of construction that, unless HERA 
states otherwise, the grants are to be considered Community Development 
Block Grant (CDBG) funds. The grant program under Title III is commonly 
referred to as the Neighborhood Stabilization Program (NSP). HERA 
authorizes the Secretary to specify alternative requirements to any 
provision under Title I of the Housing and Community Development Act of 
1974, as amended, (the HCD Act) except for requirements related to fair 
housing, nondiscrimination, labor standards, and the environment 
(including lead-based paint), in accordance with the terms of section 
2301 of HERA and for the sole purpose of expediting the use of grant 
funds. On October 6, 2008, HUD published a notice (73 FR 58330) 
advising the public of the allocation formula and allocation amounts, 
the list of grantees, alternative requirements, and waivers granted. 
Today's notice advises the public of substantive revisions to the 
October 6, 2008 notice, primarily as a result of changes to NSP made by 
Title XII of Division A of the American Recovery and Reinvestment Act 
of 2009 (the ``Recovery Act'') (Pub. L. 111-005, approved February 17, 
2009). Today's notice also makes a number of non-substantive technical 
corrections to the October 6, 2008 publication.

Substantive Revisions

    The substantive revisions made by this notice follow. The Federal 
Register page number identifies where the language to be revised can be 
found in the October 6, 2008, notice.
    A. Section 2301(c)(3)(C) of HERA was amended to permit NSP funds to 
be used to establish and operate land banks for homes and residential 
properties that have been foreclosed upon. As a result, and to ensure 
consistency with section 2301(c)(3)(C) of HERA, HUD is amending the 
definition of ``Land Bank'' at page 58332 to read as follows:
    Land bank. A land bank is a governmental or nongovernmental 
nonprofit entity established, at least in part, to assemble, 
temporarily manage, and dispose of vacant land for the purpose of 
stabilizing neighborhoods and encouraging re-use or redevelopment of 
urban property. For the purposes of NSP, a land bank will operate in a 
specific, defined geographic area. It will purchase properties that 
have been foreclosed upon and maintain, assemble, facilitate 
redevelopment of, market, and dispose of the land-banked properties. If 
the land bank is a governmental entity, it may also maintain foreclosed 
property that it does not own, provided it charges the owner of the 
property the full cost of the service or places a lien on the property 
for the full cost of the service.
    The table of NSP eligible uses on page 58338 has also been revised 
to reflect this change. The corrected table of eligible NSP uses is 
published below. In addition, the definition of Subrecipient on page 
58332 is revised to clarify that a land bank is a subrecipient, as 
follows:
    Subrecipient. Subrecipient shall have the same meaning as at the 
first sentence of 24 CFR 570.500(c). This includes any nonprofit 
organization (including a unit of general local government) that a 
state awards funds to. The term also includes any land bank receiving 
NSP funds from the grantee or other subrecipient.
    B. Section 2301(d)(4) of HERA, which established requirements for 
the disposition of revenue generated by NSP assisted activities, was 
repealed by the Recovery Act. As a result of this repeal, revenue 
generated from the use of NSP funds and received by a private 
individual or other entity that is not a subrecipient is not required 
to be returned to the grantee as was required by section 2301(d)(4). 
Notwithstanding the elimination of this requirement, grantees are 
strongly encouraged to avoid the undue enrichment of entities that are 
not subrecipients. For example, grantees are encouraged to structure 
assistance to developers that undertake acquisition and/or 
rehabilitation as loans rather than grants. Grantees are also 
encouraged to include language in agreements with entities that are not 
subrecipients that provides for grantees to share in any excess cash 
flow generated by the assisted project to the extent practicable. 
(Generally, excess cash flow on a real estate project is the amount of 
cash generated from operations, sales, or refinancing that is in excess 
of the amount required to provide the owner a reasonable return on its 
equity investment.) A further result of the repeal of this provision is 
that program income received after July 30, 2013 is not required to be 
returned to HUD for deposit in the Treasury. However, the program 
income requirements of the CDBG program are still applicable to income 
directly generated from the use of NSP funds and received by grantees 
or subrecipients. Accordingly, the definition of ``Revenue for the 
purposes of section 2301(d)(4)'' on page 58332, first column, of the 
October 6, 2008, notice is removed. In addition, Section N beginning on 
page 58340, second column, of the October 6, 2008 notice is revised to 
read as follows:

N. Alternative Requirement for Program Income Generated by Activities 
Assisted With Grant Funds

Requirement
    1. Revenue (i.e., gross income) received by a state, unit of 
general local government, or subrecipient (as defined at 24 CFR 
570.500(c)) that is directly generated from the use of CDBG funds 
(which term includes NSP grant funds) constitutes CDBG program income. 
To ensure consistency of treatment of such program income, the 
definition of program income at 24 CFR 570.500(a) shall be applied to 
amounts received by states, units of general local government, and 
subrecipients.
    2. Cash management. Substantially all program income must be 
disbursed for eligible NSP activities before additional cash 
withdrawals are made from the U.S. Treasury.
    3. Agreements with subrecipients. States and units of general local 
government must incorporate in subrecipient agreements such provisions 
as are necessary to ensure

[[Page 29225]]

compliance with the requirements of this section.
    C. Section 2301(d)(1) of HERA limits the purchase price of a 
foreclosed upon home or residential property by requiring the property 
to be purchased at a discount from the current market appraised value. 
Section Q of the October 6, 2008, notice implemented purchase discount 
requirements on individual purchase transactions and purchase 
transactions in the aggregate. HUD has received numerous expressions of 
concern from grantees and other interested parties that the current 
requirements need to be modified to permit greater flexibility in 
addressing local market conditions and to avoid a downward spiral in 
property values in neighborhoods where discounts are reflected in 
valuations for subsequent sales. HUD agrees that the current purchase 
discount requirements should be modified. Additional flexibility is 
needed for those situations that involve acquisition of foreclosed upon 
properties that cannot be purchased at the minimum discount of 5 
percent required for individual transactions and the 15 percent minimum 
discount required for transactions in the aggregate. Many grantees have 
indicated that some real estate owned (REO) holders are unable or 
unwilling to sell a property at a price that reflects such a discount. 
Of more concern to many grantees is the potentially adverse impact that 
discounted sales prices on foreclosed properties may have on other 
properties in the neighborhood where the foreclosures occurred. One 
concern is that a property sold at a discount may be used as a 
comparable sale for purposes of subsequent appraisals in the 
neighborhood where the foreclosure occurred. Since the discount has to 
be taken against the current market appraised value, the use of the 
discounted sales price as a comparable would understate the true market 
value of that property. Although HUD has confirmed with representatives 
of the appraisal industry that such sales transactions should not be 
used as comparables in other appraisals, no guarantee exists that 
appraisers would in all cases be aware that the sales price reflected a 
governmentally required discount. Of further concern to many grantees 
is the effect of section 2301(d)(3) of HERA which provides that the 
sale of a foreclosed upon property that was acquired with NSP 
assistance to an individual as a primary residence cannot be greater 
than the cost to acquire and rehabilitate or redevelop such property. 
Thus, it is possible that the purchase discount will be reflected in 
two sales transactions involving the same property, i.e., the sale of 
the foreclosed property to the grantee and the subsequent resale of the 
property by the grantee to an individual as a primary residence. Again, 
while neither of these transactions should be used as a comparable for 
subsequent appraisals in the neighborhood, the grantee cannot assure 
that the transaction(s) will be ignored for such purpose. Based on the 
foregoing considerations, HUD has determined that the current 
requirements for purchase discounts in the aggregate impair the 
effective implementation of HERA and should be deleted. As a result, 
today's publication eliminates at page 58342, second column, the 15 
percent aggregate discount requirement at Section Q.1.b of the October 
6, 2008, notice. However, although section 2301(d)(1) requires that a 
foreclosed upon home or residential property be purchased at a 
discount, the level of the discount is not specified. HUD has decided 
to reduce the minimum individual discount requirement from 5 percent to 
1 percent. HUD believes that this reduction will provide grantees with 
maximum flexibility to avoid the potentially adverse impact of 
discounts on neighborhood property values. Grantees are nonetheless 
encouraged to negotiate with lenders to obtain price reductions 
commensurate with the avoided costs of holding, marketing and selling 
the homes. Grantees are also encouraged to take reasonable steps to 
ensure disclosure of any discount/price reduction resulting from 
compliance with HERA or other applicable legal requirements. Such steps 
may include posting sales data on individual acquisitions (sales price, 
current market appraised value, and discount/price reduction) on the 
grantee's Web site, providing such data to multiple listing services, 
and including the information in the deed transferring title to the 
purchaser (if permitted under state or local laws or regulations). 
Grantees are also reminded that they can prohibit the use of NSP-funded 
acquisitions as comparables in the scope of work developed for 
appraisals procured in connection with subsequent acquisitions. 
Accordingly, the background and requirements for Section Q, Purchase 
Discount, at page 58342 of the October 6, 2008, notice are revised to 
read as follows:

Q. Purchase Discount

Background
    Section 2301(d)(1) limits the purchase price of a foreclosed home, 
as follows: ``Any purchase of a foreclosed upon home or residential 
property under this section shall be at a discount from the current 
market appraised value of the home or property, taking into account its 
current condition, and such discount shall ensure that purchasers are 
paying below-market value for the home or property.''
    To ensure that uncertainty over the meaning of this section does 
not delay program implementation, HUD is defining ``current market 
appraised value'' in this notice. In recognition of the statutory 
discount requirement, HUD is requiring a minimum discount of 1 percent 
for each residential property purchased with NSP funds. Grantees are 
nonetheless encouraged to negotiate with lenders to obtain price 
reductions commensurate with the avoided costs of holding, marketing 
and selling the homes.
Requirements
    1. Each foreclosed-upon home or residential property shall be 
purchased at a discount of at least 1 percent from the current market-
appraised value of the home or property.
    2. An NSP grantee may not provide NSP funds to another party to 
finance an acquisition of tax foreclosed (or any other) properties from 
itself, other than to pay necessary and reasonable costs related to the 
appraisal and transfer of title. If NSP funds are used to pay such 
costs when property owned by the grantee is conveyed to a subrecipient, 
homebuyer, developer, or other jurisdiction, the property is NSP-
assisted and subject to all program requirements, such as requirements 
for NSP-eligible use and benefit to income-qualified persons.
    3. The address, appraised value, purchase offer amount, and 
discount amount of each property purchase must be documented in the 
grantee's program records. D. As noted in the discussion of the NSP 
purchase discount requirements, section 2301(d)(1) of HERA requires 
that the purchase price of a foreclosed upon home or residential 
property must reflect a discount from the current market appraised 
value of the property. The October 6, 2008, notice defined ``current 
market appraised value'' to mean the value of the property established 
through an appraisal made in conformity with URA appraisal 
requirements. HUD has determined that compliance with URA appraisal 
requirements is unnecessarily burdensome if the anticipated value of 
the proposed acquisition is estimated at $25,000 or less and the 
acquisition is voluntary. Consequently, if the grantee determines that 
the anticipated value of

[[Page 29226]]

the proposed acquisition is estimated at $25,000 or less and the 
acquisition is voluntary, the current market appraised value of the 
property may be established by a valuation of the property that is 
based on a review of available data and is made by a person qualified 
to make the valuation. The definition of ``current market appraised 
value'' on page 58331, third column, of the October 6, 2008 notice is 
revised to read as follows:
    Current market appraised value. The current market appraised value 
means the value of a foreclosed upon home or residential property that 
is established through an appraisal made in conformity with the 
appraisal requirements of the URA at 49 CFR 24.103 and completed within 
60 days prior to an offer made for the property by a grantee, 
subrecipient, developer, or individual homebuyer; provided, however, if 
the anticipated value of the proposed acquisition is estimated at 
$25,000 or less, the current market appraised value of the property may 
be established by a valuation of the property that is based on a review 
of available data and is made by a person the grantee determines is 
qualified to make the valuation.
    E. The Recovery Act included several provisions concerning tenants' 
rights that are applicable to acquisitions under HERA. A grantee must 
document its efforts to ensure that the initial successor in interest 
in a foreclosed upon dwelling or residential real property (typically, 
the initial successor in interest in property acquired through 
foreclosure is the lender or trustee for holders of obligations secured 
by mortgage liens) has provided bona fide tenants with the notice and 
other protections outlined in the Recovery Act. Grantees are cautioned 
that NSP funds may not be used to finance the acquisition of property 
from the initial successor in interest that failed to comply with 
applicable requirements unless it assumes the obligations of such 
initial successor in interest with respect to bona fide tenants. 
Grantees who elect to assume such obligations are reminded that tenants 
displaced as a result of the NSP funded acquisition are entitled to the 
benefits outlined in 24 CFR 570.606. Section K, Acquisition and 
Relocation, on page 58339 of the October 6, 2008 notice is amended by 
adding the following requirements at the end thereof:
    2. The following requirements apply to any foreclosed upon dwelling 
or residential real property that was acquired by the initial successor 
in interest pursuant to the foreclosure after February 17, 2009 and was 
occupied by a bona fide tenant at the time of foreclosure. The use of 
NSP funds for acquisition of such property is subject to a 
determination by the grantee that the initial successor in interest 
complied with these requirements.
    a. The initial successor in interest in a foreclosed upon dwelling 
or residential real property shall provide a notice to vacate to any 
bona fide tenant at least 90 days before the effective date of such 
notice. The initial successor in interest shall assume such interest 
subject to the rights of any bona fide tenant, as of the date of such 
notice of foreclosure: (i) Under any bona fide lease entered into 
before the notice of foreclosure to occupy the premises until the end 
of the remaining term of the lease, except that a successor in interest 
may terminate a lease effective on the date of sale of the unit to a 
purchaser who will occupy the unit as a primary residence, subject to 
the receipt by the tenant of the 90-day notice under this paragraph; or 
(ii) without a lease or with a lease terminable at will under State 
law, subject to the receipt by the tenant of the 90-day notice under 
this paragraph, except that nothing in this section shall affect the 
requirements for termination of any Federal- or State-subsidized 
tenancy or of any State or local law that provides longer time periods 
or other additional protections for tenants.
    b.i. In the case of any qualified foreclosed housing in which a 
recipient of assistance under section 8 of the United States Housing 
Act of 1937 (42 U.S.C. 1437f) (the ``Section 8 Program'') resides at 
the time of foreclosure, the initial successor in interest shall be 
subject to the lease and to the housing assistance payments contract 
for the occupied unit.
    ii. Vacating the property prior to sale shall not constitute good 
cause for termination of the tenancy unless the property is 
unmarketable while occupied or unless the owner or subsequent purchaser 
desires the unit for personal or family use.
    iii. If a public housing agency is unable to make payments under 
the contract to the immediate successor in interest after foreclosure, 
due to (A) an action or inaction by the successor in interest, 
including the rejection of payments or the failure of the successor to 
maintain the unit in compliance with the Section 8 Program or (B) an 
inability to identify the successor, the agency may use funds that 
would have been used to pay the rental amount on behalf of the family--
(1) to pay for utilities that are the responsibility of the owner under 
the lease or applicable law, after taking reasonable steps to notify 
the owner that it intends to make payments to a utility provider in 
lieu of payments to the owner, except prior notification shall not be 
required in any case in which the unit will be or has been rendered 
uninhabitable due to the termination or threat of termination of 
service, in which case the public housing agency shall notify the owner 
within a reasonable time after making such payment; or (2) for the 
family's reasonable moving costs, including security deposit costs.
    c. For purposes of this section, a lease or tenancy shall be 
considered bona fide only if: (i) The mortgagor under the contract is 
not the tenant; (ii) the lease or tenancy was the result of an arms 
length transaction; and (iii) the lease or tenancy requires the receipt 
of rent that is not substantially less than fair market rent for the 
property.
    d. The grantee shall maintain documentation of its efforts to 
ensure that the initial successor in interest in a foreclosed upon 
dwelling or residential real property has complied with the 
requirements under section K.2.a. and K.2.b. If the grantee determines 
that the initial successor in interest in such property failed to 
comply with such requirements, it may not use NSP funds to finance the 
acquisition of such property unless it assumes the obligations of the 
initial successor in interest specified in section K.2.a. and K.2.b. If 
a grantee elects to assume such obligations, it must provide the 
relocation assistance required pursuant to 24 CFR 570.606 to tenants 
displaced as a result of an activity assisted with NSP funds and 
maintain records in sufficient detail to demonstrate compliance with 
the provisions of that section.
    3. The recipient of any grant or loan made from NSP funds may not 
refuse to lease a dwelling unit in housing with such loan or grant to a 
participant under the Section 8 Program because of the status of the 
prospective tenant as such a participant.
    4. This section shall not preempt any Federal, State or local law 
that provides more protections for tenants.
    F. HUD has determined that HUD-approved homebuyer counseling 
services may not be available to all grantees. To provide for such 
situations, section B.3.b. on page 58334 of the October 6, 2008 notice, 
is revised as follows to allow a grantee to submit a request for an 
exception to the requirement that each NSP-assisted homebuyer must 
receive and complete at least 8 hours of homebuyer counseling from a 
HUD-approved counseling agency.
    b. The grantee must require each NSP-assisted homebuyer to receive 
and

[[Page 29227]]

complete at least 8 hours of homebuyer counseling from a HUD-approved 
housing counseling agency before obtaining a mortgage loan. If the 
grantee is unable to meet this requirement for a good cause (e.g., 
there are no HUD-approved housing counseling agencies within the 
grantee's jurisdiction, or there are no HUD-approved housing counseling 
agencies within the grantee's jurisdiction that engage in homebuyer 
counseling), the grantee may submit a request for an exception to this 
requirement to the responsible HUD field office, and the HUD field 
office has the authority to grant an exception for good cause. The 
grantee must ensure that the homebuyer obtains a mortgage loan from a 
lender who agrees to comply with the bank regulators' guidance for non-
traditional mortgages (see, Statement on Subprime Mortgage Lending 
issued by the Office of the Comptroller of the Currency, Board of 
Governors of the Federal Reserve System, Federal Deposit Insurance 
Corporation, Department of the Treasury, and National Credit Union 
Administration, available at https://www.fdic.gov/regulations/laws/rules/5000-5160.html). Grantees must design NSP programs to comply with 
this requirement and must document compliance in the records, for each 
homebuyer. Grantees are cautioned against providing or permitting 
homebuyers to obtain subprime mortgages for whom such mortgages are 
inappropriate, including homebuyers who qualify for traditional 
mortgage loans.

Technical Corrections

    Summaries of the technical corrections made by this document 
follow. The Federal Register page number identifies where the language 
to be corrected can be found in the October 6, 2008 notice. The 
corrected text made by this notice follows.
    A. On page 58334 under Section B.4.b., HUD inadvertently omitted to 
apply the alternative requirement for the minimum citizen comment 
period of 15 calendar days to substantial action plan amendments 
submitted subsequently to the initial NSP submission. The application 
of this alternative requirement to all substantial amendments is 
necessary to expedite the use of grant funds.

Correction

    On page 58334, Section B., paragraph 4.b. should read as follows:
    b. Each grantee must prepare and submit its annual Action Plan 
amendment to HUD in accordance with the consolidated plan procedures 
for a substantial amendment under the annual CDBG program as modified 
by this notice or HUD will reallocate the funds allocated for that 
grantee. HUD is providing alternative requirements to 42 U.S.C. 
5304(a)(2) and waiving 91.105(c)(2), 91.105(k), 91.115(c)(2), and 
91.115(i) to the extent necessary to allow the grantee to provide no 
fewer than 15 calendar days for citizen comment (rather than 30 days) 
for its initial NSP submission and any subsequent substantial NSP 
action plan amendment, and to require that, at the time of submission 
to HUD, each grantee post its approved action plan amendment and any 
subsequent NSP amendments on its official website along with a summary 
of citizen comments received within the 15-day comment period. After 
HUD processes and approves the plan amendment and both HUD and the 
grantee have signed the grant agreement, HUD will establish the 
grantee's line of credit in the amount of funds included in the Action 
Plan amendment, up to the allocation amount.
    B. On page 58335 under Section E and the paragraph entitled 
``Background,'' HUD erroneously included a statement that an activity 
may meet the HERA low- and moderate-income national objective if the 
assisted activity, ``Creates or retains jobs for persons whose 
household incomes are at or below 120 percent of median income 
(LMMI).'' As a result, HUD is removing on page 58335, third column, the 
bulleted statement that reads: ``Creates or retains jobs for persons 
whose household incomes are at or below 120 percent of median income 
(LMMI).'' If an NSP Action Plan substantial amendment included an 
activity that addressed the HERA low- and moderate-income national 
objective requirement on the basis of job creation or retention and 
funds have not been obligated for that activity, the grantee should 
submit an amendment that includes one or more new activities that 
comply with the NSP income eligibility requirements. If funds have 
already been obligated for the original activity in reliance on the 
October 6, 2008 notice language, the activity may be completed provided 
it is designed to create or retain permanent jobs and at least 51 
percent of the jobs will be held by or made available to persons whose 
incomes are at or below 120 percent median income.

Correction

    On page 58335 under Section E and the second paragraph under the 
section entitled ``Background,'' should read as follows:
    Second, this provision also redefines and supersedes the definition 
of ``low- and moderate-income,'' effectively allowing households whose 
incomes exceed 80 percent of area median income but do not exceed 120 
percent of area median income to qualify as if their incomes did not 
exceed the published low- and moderate-income levels of the regular 
CDBG program. To prevent confusion, HUD will refer to this new income 
group as ``middle income,'' and keep the regular CDBG definitions of 
``low income'' and ``moderate income'' in use. Further, HUD will 
characterize aggregated households whose incomes do not exceed 120 
percent of median income as ``low-, moderate-, and middle-income 
households,'' abbreviated as LMMH. For the purposes of NSP only, an 
activity may meet the HERA low- and moderate-income national objective 
if the assisted activity:
     Provides or improves permanent residential structures that 
will be occupied by a household whose income is at or below 120 percent 
of area median income (abbreviated as LMMH);
     Serves an area in which at least 51 percent of the 
residents have incomes at or below 120 percent of area median income 
(LMMA); or
     Serves a limited clientele whose incomes are at or below 
120 percent of area median income (LMMC).
    C. On page 58336, Section E., paragraph 2.e. under ``National 
objectives supersession and alternative requirements,'' HUD 
inadvertently omitted a requirement regarding the amount of grant funds 
to house individuals or families whose incomes do not exceed 50 percent 
of area median income.

Correction

    On page 58336, Section E., paragraph 2.e. is added as follows:
    e. Not less than 25 percent of any NSP grant shall be used for the 
purchase and redevelopment of abandoned or foreclosed homes or 
residential properties that will be used to house individuals or 
families whose incomes do not exceed 50 percent of area median income.
    D. On page 58338, in the second column of the table of NSP-eligible 
uses and correlated eligible activities from the CDBG entitlement 
regulations, HUD inadvertently omitted 24 CFR 570.202 from the list of 
activities correlated with eligible use (E). HUD inadvertently omitted 
``24 CFR 570'' in the citation for community-based development 
organizations in the list of activities eligible correlated with 
eligible use (E). Although the October 6, 2008 notice

[[Page 29228]]

indicated that rehabilitation may include counseling for those seeking 
to take part in the activity, HUD inadvertently omitted to clarify that 
housing counseling is an eligible activity delivery cost for any 
correlated eligible activity that requires an NSP-assisted homebuyer to 
complete homebuyer counseling pursuant to section B.3.b.

Correction

    On page 58338, the table should read as follows:

------------------------------------------------------------------------
                                     Correlated eligible activities from
         NSP-eligible uses            the CDBG entitlement regulations
------------------------------------------------------------------------
(A) Establish financing mechanisms   As part of an activity
 for purchase and redevelopment of   delivery cost for an eligible
 foreclosed upon homes and           activity as defined in 24 CFR
 residential properties, including   570.206.
 such mechanisms as soft-seconds,    Also, the eligible
 loan loss reserves, and shared-     activities listed below to the
 equity loans for low- and           extent financing mechanisms are
 moderate-income homebuyers.         used to carry them out.
(B) Purchase and rehabilitate        24 CFR 570.201(a)
 homes and residential properties    Acquisition,
 that have been abandoned or        (b) Disposition,
 foreclosed upon, in order to       (i) Relocation, and
 sell, rent, or redevelop such      (n) Direct homeownership assistance
 homes and properties.               (as modified below);
                                     570.202 eligible
                                     rehabilitation and preservation
                                     activities for homes and other
                                     residential properties.
                                     HUD notes that any of the
                                     activities listed above may include
                                     required homebuyer counseling as an
                                     activity delivery cost.
(C) Establish and operate land       24 CFR 570.201(a)
 banks for homes and residential     Acquisition and (b) Disposition.
 properties that have been
 foreclosed upon.
                                     HUD notes that any of the
                                     activities listed above may include
                                     required homebuyer counseling as an
                                     activity delivery cost.
(D) Demolish blighted structures..   24 CFR 570.201(d) Clearance
                                     for blighted structures only.
(E) Redevelop demolished or vacant   24 CFR 570.201(a)
 properties.                         Acquisition,
                                    (b) Disposition,
                                    (c) Public facilities and
                                     improvements,
                                    (e) Public services for housing
                                     counseling, but only to the extent
                                     that counseling beneficiaries are
                                     limited to prospective purchasers
                                     or tenants of the redeveloped
                                     properties,
                                    (i) Relocation, and
                                    (n) Direct homeownership assistance
                                     (as modified below).
                                     24 CFR 570.202 Eligible
                                     rehabilitation and preservation
                                     activities for demolished or vacant
                                     properties.
                                     24 CFR 570.204 Community
                                     based development organizations.
                                     HUD notes that any of the
                                     activities listed above may include
                                     required homebuyer counseling as an
                                     activity delivery cost.
------------------------------------------------------------------------

    E. On page 58338 Section J, the third column, HUD incorrectly cited 
the legal authority in characterizing the substance of the paragraph.

Correction

    On page 58338 Section J, third column, the paragraph should read as 
follows:
Background
    Section 2301(d)(3) of HERA directs that, if an abandoned or 
foreclosed-upon home or residential property is purchased, redeveloped, 
or otherwise sold to an individual as a primary residence, then such 
sale shall be in an amount equal to or less than the cost to acquire 
and redevelop or rehabilitate such home or property up to a decent, 
safe, and habitable condition. (Sales and closing costs are eligible 
NSP redevelopment or rehabilitation costs.) Note that the maximum sales 
price for a property is determined by aggregating all costs of 
acquisition, rehabilitation, and redevelopment (including related 
activity delivery costs, which generally may include, among other 
items, costs related to the sale of the property).
    F. On page 58340, first column, under Section M and the third 
paragraph entitled ``Background'', HUD inadvertently included an 
incorrect citation for cash management requirements governing States.

Correction

    On page 58340, the third paragraph after ``Background'' should read 
as follows:
    A further complication is that HERA clearly expects grantees to 
earn program income under this grant program. As provided under 24 CFR 
85.21 for entitlements, grantees and subrecipients shall disburse 
program income before requesting additional cash withdrawals from the 
U.S. Treasury. States are governed similarly by 24 CFR 570.489(e)(3) 
and 31 CFR part 205. This requirement is reflected in the regulations 
governing use of program income by States and units of general local 
government under the CDBG program. This means that a grantee that 
successfully and quickly deploys its program and generates program 
income may obligate, draw down, and expend an amount equal to its NSP 
allocation amount, and still have funds remaining in its line of 
credit.
    G. On page 58347 in Attachment A to the Notice, HUD inadvertently 
left one grantee off the list of local governments that qualify to 
receive an NSP allocation and included that grantee's allocation amount 
in the state's allocation.

Correction

    At the bottom of page 58347, the allocation amount for the State of 
Maryland is corrected to read: $26,704,504. A new line is inserted 
below the allocation for the State of Maryland and above the line for 
the allocation for Prince Georges County, Maryland to read:

[[Page 29229]]



------------------------------------------------------------------------
                                                             NSP grant
              State                     Grantee name          amount
------------------------------------------------------------------------
MD...............................  Montgomery County....      $2,073,965
------------------------------------------------------------------------

    H. In Attachment A to the Notice, HUD only listed a single 
allocation for multiple Insular Areas, without indicating the allocated 
amount for each Insular Area. Also, without this correction, Insular 
Areas were unable to submit amendments by the Notice deadline.

Correction

    HUD directly notified the Insular Areas to establish a January 15, 
2009, deadline for submission of an NSP substantial amendment. At the 
end of Attachment A, the allocations for the Insular Areas are inserted 
as follows:

------------------------------------------------------------------------
                      Insular area                          Allocation
------------------------------------------------------------------------
Virgin Islands..........................................        $579,451
Northern Marianas.......................................         364,162
Guam....................................................         100,674
American Samoa..........................................         100,000
                                                         ---------------
    Total...............................................       1,144,287
------------------------------------------------------------------------

Additional Amendments

    1. Environmental. A Finding of No Significant Impact (FONSI) with 
respect to the environment has been made for this Notice in accordance 
with HUD regulations at 24 CFR part 50, which implement section 
102(2)(C) of the National Environmental Policy Act of 1969 (42 U.S.C. 
4332(2)(C)). The FONSI is available for public inspection between 8 
a.m. and 5 p.m. weekdays in the Regulations Division, Office of General 
Counsel, Department of Housing and Urban Development, 451 Seventh 
Street, SE., Room 10276, Washington, DC 20410-0500. Due to security 
measures at the HUD Headquarters building, an advance appointment to 
review the FONSI must be scheduled by calling the Regulations Division 
at (202) 708-3055 (this is not a toll-free number).
    2. Waivers of Alternative Requirements. Alternative requirements in 
this Notice and the October 6, 2008, Notice (73 FR 58330) may be waived 
in the same manner as regulatory requirements. Grantees must submit a 
written request to HUD. Upon a determination of good cause, the 
Assistant Secretary for Community Development and Planning or the 
General Deputy Assistant Secretary for Community Development and 
Planning may, subject to statutory limitations, waive any provision of 
this Notice. Each waiver must be in writing and must specify the 
grounds for approving the waiver.

    Dated: June 11, 2009.
Nelson R. Breg[oacute]n,
General Deputy Assistant Secretary, Office of Community Planning and 
Development.
[FR Doc. E9-14360 Filed 6-18-09; 8:45 am]
BILLING CODE 4210-67-P