In an effort to stabilize neighborhoods and rebuild local economies, HUD secretary Shawn Donovan announced Thursday that HUD is awarding $2 billion in grants to states, local governments, and nonprofit housing developers under its Neighborhood Stabilization Program (NSP).

“Vacant homes have a debilitating effect on neighborhoods and often lead to reduced property values, blight, and neighborhood decay,” Donovan said. “This additional $2 billion in Recovery Act funding will help stabilize hard hit communities by turning vacant homes into affordable housing opportunities. The NSP is a key part of the Obama administration’s comprehensive approach to address the national housing and economic crisis.”

Grants awarded Thursday will build on the work currently being done to help state and local governments and nonprofit developers collaborate to acquire land and property, to demolish or rehabilitate abandoned properties, and to offer down-payment and closing cost assistance to low- to middle-income homebuyers. In addition, grantees can create “land banks” to assemble, temporarily manage, and dispose of foreclosed homes.

Funded through the American Recovery and Investment Act, nearly 60 grantees are receiving awards. This round of NSP grants is being awarded competitively to applicants who developed the most innovative ideas to rebuild local communities and demonstrated the capacity to be responsible stewards of taxpayer dollars. The awards will require housing counseling for families receiving homebuyer assistance funds through NSP, and this funding will protect homebuyers by requiring grantees to ensure that new homebuyers under this program obtain a mortgage from a lender who agrees to comply with sound lending practices.

“By investing Recovery Act dollars in revitalizing hard-hit neighborhoods, we’re not only creating new job opportunities, but giving communities across the country an opportunity for a fresh start,” said Vice President Biden. “These competitive awards go to the heart of the Recovery Act, funding innovative projects that both provide immediate relief and help lay a new foundation for long-term economic growth.”

Last Year, HUD’s NSP awarded nearly $4 billion in Recovery Act funds to over 300 grantees across the nation. The $787 billion Recovery Act program, signed into law on February 17, 2009 by President Obama, has already provided nearly $100 billion in tax relief for families and businesses, helped fill critical budget gaps for hard-hit state and local governments, and jump-started tens of thousands of projects that are creating jobs and laying a new foundation for long-term economic growth.