#155 Fall 2008 — From Grassroots to Oval Office

$3.9 Billion in Federal Aid. Now What?

Community advocates are concerned about how wisely the emergency neighborhood stabilization fund will be used.

When the Senate passed and President Bush signed the American Housing Rescue and Foreclosure Prevention Act of 2008 in July, media focus fell mainly on the 11th-hour inclusion of funds for a potential bailout of Fannie Mae and Freddie Mac. But included in the package was a hard-fought triumph for affordable—housing advocates: a provision that authorizes $3.9 billion for an emergency neighborhood stabilization fund, to be distributed to states and localities as a bulwark against the ravages of the foreclosure crisis.

Now that the money has been dedicated to the emergency fund, however, community advocates are concerned about how wisely it will be used, and whether it will contribute to reducing segregation and increasing housing mobility for low-income people.

When the U.S. Department of Housing and Urban Development releases its guidelines for disbursal of the money, they are likely to include a timetable for communities to develop a plan for it use. Some cities intend to funnel the money into an existing housing program, while others hope to finance better neighborhood planning. Still others hope to buy foreclosed properties, then rehab and market them.

HUD will administer the fund in the same fashion as Community Development Block Grants, which worries some fair-housing advocates. “The [CDBG] funds are well-intentioned, but they frequently don’t end up promoting integration or affirmatively promoting fair housing,” said Justin Massa, executive director and founder of MoveSmart.org, a Chicago-based online effort to encourage racial and economic integration. Massa calls for “pro-integrative, pro-fair-housing guidance from HUD. There could be great things happening and I don’t think HUD’s rules are going to hurt that, but the big question is: Are they going to help?”


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