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The Neighborhood Stabilization Initiative (the “NSI”) is a pilot program designed to stabilize neighborhoods that have been hardest hit by the housing downturn.  It was jointly developed by the Federal Housing Finance Agency (FHFA), Fannie Mae and Freddie Mac and includes strategies for helping delinquent borrowers avoid foreclosure and strategies for disposing of the inventory of real estate owned (REO) properties held by Fannie Mae and Freddie Mac. 

The number of REO properties owned by Fannie Mae and Freddie Mac is declining and approaching pre-crisis levels in some states.  However, in some areas of the country REO inventory continues to increase or remains near historic highs.  Some particular markets have large concentrations of distressed and low-value REO properties as well as large volumes of loans that have been delinquent for one to two years that are likely to become REO. 

Given the unique challenges presented by these markets—high vacancy rates, weak for-sale markets, steep home-price declines—Fannie Mae and Freddie Mac are partnering with the National Community Stabilization Trust (NCST), a national non-profit organization experienced in stabilization efforts for distressed communities.  Working together, they will leverage their ties to “boots on the ground” community organizations and local non-profits, and work closely with local governments to make timely and informed decisions about the best treatment of individual properties. 






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