Governor Rell Outlines Plan for $25 Million in

Aid to Alleviate Foreclosure Crisis

            Governor M. Jodi Rell today announced that the state has developed a draft plan to allocate more than $25 million in federal funds intended to help communities respond to the national foreclosure crisis.

            The federal funding is part of the Housing and Economic Recovery Act of 2008. Under the bill, the U.S. Department of Housing and Urban Development crafted the Neighborhood Stabilization Program (NSP), which provides emergency grants to states and some cities in order to buy foreclosed homes and then rehabilitate, resell or redevelop those homes to stabilize neighborhoods and ensure surrounding homes maintain their value.

            “I am committed to helping every family, when possible, to keep their single most important investment – their home,” Governor Rell said. “The mortgage credit crisis has affected far too many families, here in Connecticut and across the nation. Worse still, the effects of the problem have spread – around our neighborhoods and throughout our economy. The national markets are still coping with the effects of a crisis in confidence that has its roots in investors’ doubts about the wisdom of subprime lending.

            “Our cities are bearing the brunt of this crisis and these funds will go a long way in helping some of the hardest-hit areas,” the Governor said. “Seven of our urban centers account for more than 25 percent of Connecticut’s foreclosures and pre-foreclosure actions. These funds will have a lasting positive impact in these communities, as they will ensure up to 400 units of housing will be acquired for rehabilitation and redevelopment rather than sitting empty and idle.”

            The state’s proposed plan will allocate $6 million to Bridgeport; $3,566,000 to Waterbury; $3,320,000 to New Haven; $2,977,000 to Stamford; $2,805,000 to Hartford; $1,826,000 to Meriden; and $1,823,300 to New Britain. Another $2.1 million is proposed to reward communities that exceed standards for timely performance. The remainder will go toward technical assistance and program administration.

            Each state must submit an action plan to HUD by December 1 to receive its NSP funds. In putting Connecticut’s plan together, the state’s Department of Economic and Community Development took federal requirements and local factors into consideration in determining these seven cities as areas of greatest need.

            “We have no intention of leaving Connecticut’s other communities without help,” Governor Rell said. “I am asking that Neighborhood Stabilization Program rules and guidelines be temporarily extended to the Small Cities Community Development Block Grant Program for the next two federal fiscal years so that every community can receive the assistance it needs. We must ensure that all of our cities and towns have help in dealing with this crisis.”

            Each year, Connecticut receives approximately $13 million under the federal Small Cities Program, and an additional 22 cities and towns receive more than $27 million directly from HUD. The change Governor Rell is seeking would allow cities and towns that receive grants through the Small Cities program administered by DECD to address foreclosed properties in their communities.

            Helping communities stabilize neighborhoods affected by foreclosures is only a part of Connecticut’s response to this crisis. In November of last year, Governor Rell unveiled the $50 million “CT FAMLIES” program, which allows homeowners stuck in subprime mortgages and unable to make their payments to refinance their loans with the Connecticut Housing Finance Authority at a fixed rate.

            Prior to submitting Connecticut’s NSP plan to HUD, the proposal will be open to public comment for 15 days. The draft document can be viewed at www.decd.org. Comments on the plan can be emailed to NSP.Comments@ct.gov until November 21, 2008. After reviewing the comments, DECD may make changes before submitting the final plan.