By statute, NSP grantees are required to expend at least 50 percent of their initial allocation of NSP funds within 2 years of receipt of those funds. Several NSP3 grantees have failed to meet their 50% expenditure requirement by the deadline date. In these cases, HUD is making a finding of the statutory violation and allowing grantees thirty days to demonstrate compliance. Failure to demonstrate compliance will lead to an informal consultation between HUD and the grantee, after which HUD may decide to recapture funds from the grantee or provide for other corrective action(s) or sanction. If HUD recaptures funds as a corrective action, the maximum that would be subject to recapture is the difference between the grantee’s actual expenditures and 50% of the grant amount. In any event, grantees should continue to move ahead with their programs, rather than await the outcome of the informal consultation, to ensure that they can meet the statutory 100% expenditure requirement in 2014.