Neighborhood Stabilization Program (NSP)

Note:  All of the Neighborhood Stabilization Program funds have been expended and no new applications are being accepted at this time.

The Neighborhood Stabilization Program (NSP) is a program funded by the U.S. Department of Housing and Urban Development (HUD) through the American Recovery and Reinvestment Act (ARRA) of 2009. In Oregon, the program is being administered by the Oregon Department of Housing and Community Services (OHCS) which is utilizing Washington County as one of its Subgrantees. The program is designed to provide financing mechanisms to assist homebuyers in purchasing foreclosed-upon residential properties in targeted areas of Washington County for the purposes of stabilizing property values in the neighborhood.

For more information on the NSP-2 program, please visit the following website: http://www.ohcs.oregon.gov/OHCS/SFF_Neighborhood_Stabilization_NSP2_Oregon_Program.shtml 

Subordinate Mortgage Financing

In Washington County, the Office of Community Development will provide “soft” second mortgage assistance of up to $50,000 to income-eligible homebuyers to purchase bank-owned foreclosed properties (more commonly known as Real Estate Owned or REOs)in targeted areas undergoing foreclosures or are at high risk of foreclosures. Below is a list of maps of these targeted areas in Washington County:

• Cedar Hill Area
  
• Sherwood Area
  
• Aloha Area
• Hillsboro Area
  

Click the following link to download Google Earth. This will allow you to access maps for NSP-2 target areas (link for instructions below): http://www.ohcs.oregon.gov/OHCS/Recovery/pdfs/NSP2_GoogleEarth.zip

For instructions on how to install Google Earth for use on a personal computer click the following link: http://www.ohcs.oregon.gov/OHCS/Recovery/pdfs/NSP2_GoogleEarth.zip

The assistance can include down payment, closing costs, pre-paids and first mortgage reduction. Depending on the physical quality of the property, the assistance can also include rehabilitation provided that the total assistance remains at or below $50,000. The home must remain the borrower’s primary residence and cannot be used at any time as a rental property.

Lender Underwriting Guidelines

OHCS outlines the terms and conditions of this second mortgage assistance to eligible homebuyers in its Lender Underwriting Guidelines.  For homebuyers looking to use NSP funds just to acquire a property, click here to view the underwriting guidelines for acquisition assistance.  For homebuyers looking to use NSP funds to acquire a property and use NSP funds for rehabilitation of the home, click here to view the underwriting guidelines for acquisition and rehabilitation assistance . It is highly recommended that all homebuyers review these guidelines prior to application.

These “soft” second mortgages will be subordinated to the first mortgage from the homebuyer’s primary lender. The first mortgage must be a 30-year term loan and can only have a fixed interest rate. No refinances, Adjustable Rate Mortgages (ARMSs), Interest-Only, Hybrids, Combo or Second (2nd) mortgages with variable interest rates, or sub-prime loans will be allowed in conjunction with this program. Maximum debt-to-income ratio cannot exceed 45%.

The rate will be 0% due upon sale, transfer of title or refinance of the first mortgage. Upon sale, transfer of title or refinancing of the property, the NSP loan amount is due and payable.  

Purchase Price Discount Requirement

The program also requires that any purchase of a foreclosed-upon home or residential property must be at a minimum one percent (1%) discount from the current market-appraised value of the property. The current market-appraised value must come from an appraisal completed within sixty (60) days prior to a final offer being made and must be done by a licensed appraiser consistent with the Uniform Standards of Professional Appraisal Practice.

Income Eligibility Requirement

The homebuyer eligibility requirements for the program are income restrictions for households that do not exceed 120% of the area median income (AMI). In this program, 120% AMI is deemed “middle-income” by HUD. 

Click here to see the FY2010 NSP Income Limits for Washington County

Housing Counseling Requirement

There is a requirement that all homebuyers receive and complete at least eight hours of homebuyer counseling from a HUD-approved housing counseling agency before obtaining a mortgage loan. This homebuyer counseling can include the ABCs of Homebuying, Homebuying 101 and other approved introduction courses. The two HUD-approved housing counseling agencies in Washington County include Portland Housing Center and Open Door Counseling Center. They serve as Regional Housing Centers for the area.
 

How to Apply

Due to the limited availability of funds, NSP funds to homebuyers will be made on a first come, first serve basis. Funds are reserved for a homebuyer when all required forms are submitted to the Office of Community Development in order for staff to make a determination that the homebuyer is income eligible, the property is eligible in its current condition or after selected rehabilitation activities are performed and the homebuyer's primary loan and primary lender are eligible based on the NSP Underwriting Guidelines.

 To begin the process in accessing these funds for a soft second mortgage, please first download, review, complete, sign and submit the attached NSP Homebuyer Loan Application and NSP Homebuyer Program Financial Records Disclosure, which enables the Office of Community Development a right or access to financial records held by the financial institution in connection with the consideration or administration of the Washington County Neighborhood Stabilization Program. These forms are to be submitted to the Office of Community Development, Attn: Ben Sturtz, NSP Coordinator at (503) 846-2882.

NSP Homebuyer Loan Application
Financial Records Disclosure

At the same time, please review the attached Required Document Checklist for the NSP Homebuyer Program.

Required Document Checklist for the NSP Homebuyer Program
Click here to download forms provided by homebuyer to the Office of Community Development

Before a Fund Reservation Letter can be provided to the homebuyer confirming they can receive NSP funds at closing, all materials need to be provided by the homebuyer and their realtor/lender. Once these materials are provided, Office of Community Development staff will perform all necessary property inspections and review the homebuyer’s loan information from their primary lender to qualify their first mortgage. The homebuyer will receive their Fund Reservation Letter in the mail confirming they are qualified to receive NSP funds. They are to sign and return this letter to: The Office of Community Development 328 W. Main Street, MS# 7, Hillsboro, OR 97123