In 2009, states, counties and cities across the country applied for approximately $3.9 billion from the United States Department of Housing and Urban Development (HUD) to confront the problems of foreclosures and property abandonment. The Neighborhood Stabilization Program (NSP) is the principal federal response to address the impact of foreclosed properties on neighborhoods. NSP provides federal grants to every state and certain local communities to purchase foreclosed or abandoned homes and rehabilitate, resell or redevelop them to stem the decline of values of neighboring homes. Under NSP1, HUD allocated the money to 308 eligible state and local governments (50 states plus 258 cities and counties). Direct entitlement grantees (those that received the funds directly from HUD) also had the authority to re-allocate these funds to other cities and towns that did not receive an NSP grant from HUD.
This article analyzes the experiences of launching an NSP project at three NSP sites in the Federal Reserve Bank of Chicago's district. The sites are Milwaukee, Wisconsin, Lafayette, Indiana and the southern suburbs of Cook County, Illinois. At each of these sites, the local foreclosure problem was (self) described as "severe" and each received about the same amount of NSP funds to stabilize the impacted neighborhoods. But these sites were also a diverse group in terms of the geographic scope of their projects and the process by which they received NSP funding: Milwaukee was an entitlement city, Lafayette was a sub-grantee of the state of Indiana and the suburban Cook County program received its NSP1 funding from the county, which itself was a direct grantee from HUD.