What Is This "Stimulus Money" That Everyone Keeps Talking About?
As part of the U.S. Department of Housing and Urban Development's Neighborhood Stabilization Program, the federal government set aside some $4 billion to help communities recover from the foreclosure crisis. As explained on the Housing of Urban Development's website:
"The [p]rogram was established for the purpose of stabilizing communities that have suffered from foreclosures and abandonment . . . [it] provides grants to states, local governments, nonprofits and a consortium of nonprofit entities on a competitive [formula-based]
How Does the Neighborhood Stabilization Program Work?
Now, this is where it gets tricky and why it's taking so long for the money to trickle down to all those foreclosure cleaning companies who are anxious to get contracts.
Each municipality (state and local governments)
Homebuyer Assistance Programs: Some are using this to help low- to moderate-income families buy homes. This doesn't sit well with many because it's kind of like, "Isn't this what got us into trouble in the first place, ie, giving home loans to people who couldn't afford them?" But that's a separate issue for another day.
Property Preservation and Cleanup: Municipalities will use the money to repair, clean out and sell foreclosed properties and/or those that have been outright abandoned. This is the initiative that excites real estate cleanup and foreclosure cleaning companies.
Cities have to do this because as noted in the article, State to focus stimulus money on foreclosures, in the Mississippi paper, The Hattiesburg American: "When a community has foreclosed housing, it affects them in several ways. Obviously, property values decline and those properties tend to become vacant and may sit for a while."
If cities don't spend the money to get these properties back in shape to be resold, they'll just sit. This invites crime on many levels and further drags down property values.
What's Taking So Long for Stimulus Money to Trickle Down to Foreclosure Clean Up Companies?
So if there's such an urgent need, you may be thinking, "What's taking so long? Why is the money not trickling down to foreclosure cleaning companies and other businesses that can help communities recover from the foreclosure crisis?"
Quite frankly, government stagnation. As any American citizen can tell you, when it comes to the government, it's like trying to run through quicksand. Things just seem to take longer. That's the way government works. And remember, the funding just started to be distributed in May. Many municipalities haven't even decided how to use the funds. This could take months.
And, once they decide on how to use the funds, they must still set up guidelines (eg, a bidding process, vendor review criteria, decide how funds will be distributed, etc.). All of this can take many more months. Add to all of this the fact that banks are backlogged and more foreclosures are coming on the market every day and what you have is the following . . .
Foreclosure Cleaning Contracts Are Going to Take Time
There will be many of them coming down the pike, but it make take another six months to a year -- or even longer -- before it happens.
BUT, those foreclosure clean up companies that are lucky enough to be set up (eg, have the proper licensing and insurance) will be inundated with work.
Why It Pays to Start a Foreclosure Clean Up Business Now
It's wise to get set up now so you can get jobs under your belt and learn about things like pricing, giving estimates, judging manpower, outsourcing to other contractors, etc. More than likely a lot of this information will be asked for in the bid process (eg, what kinds of jobs has your company handled, what do you charge for "X", etc.).
And, that's the skinny on how the stimulus money will trickle down to foreclosure cleaning business owners.
