California Journal of Politics and Policy

The federal government responded to the foreclosures crisis by implementing several policies. The Neighborhood Stabilization program (NSP) in 2009, a mitigation policy, aimed at helping local governments to buy, rehabilitate and sell foreclosed homes to mitigate the effects of the foreclosures in the most affected neighborhoods.

This paper focuses on the allocation methodology used in this program to explain why some of the most affected places in California didn’t receive adequate funds to fight foreclosures. The initial version of the NSP targeted mainly the largest cities, but left suburban municipalities — yet deeply affected by the foreclosures — with reduced or delayed funds. The use of estimations of foreclosures number to allocate the money, as well as the lack of cooperation between suburban local governments also participated to inefficiently allocate the NSP money, and suggests that urban policies need to be adapted to better fit the change of urban structure in the US.