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Federal program puts foreclosed homes on market

Bob McCall has lived in Amityville for 20 years and had never seen a massive bus with dark windows pull up on his quiet suburban street, so when one did Wednesday, he took notice.

It stopped in front of a fixed-up foreclosure home, purchased by Babylon Town with $102,000 in federal funds and ready for a family after $65,000 in renovations. "Is it a sightseeing bus, tour bus?" McCall wondered as a score of passengers in office clothes trouped out. "They got buyers or something?"

It was actually a tour of the times Wednesday, as a bus of federal, state and local officials crossed Long Island to look at eight homes stricken in the foreclosure crisis.

The tour, guided by the nonprofit Long Island Housing Partnership, was an attempt to provide a street-level progress report on the year-old Neighborhood Stabilization Program, a $4-billion initiative from the Department of Housing and Urban Development to get vacant, foreclosed homes back into circulation as affordable homes.

"Everyone is so full blown into implementation that we haven't had the luxury to stop" and analyze the progress, said Brian Segel, director of neighborhood stabilization for New York State's housing agencies.

Long Island municipalities got more than $19 million in direct funding under the program, and after partnering with nonprofits, dozens of foreclosures have been purchased. Suffolk expects to rehab 70 homes eventually, and Nassau 100 homes.

The new homes are for first-time buyers or those who've been renting for at least three years, and income limits depend on family size, such as a maximum of $85,600 for one person and $122,200 for a family of four. Costs of homes are expected to range from $150,000 to $200,000, based on what the home buyer can afford to pay before any subsidies and grants.

Yesterday's tour was a chance for both counties' executives and Babylon Town's supervisor to show appreciation to federal officials and tout progress.

But there's a problem: Local officials have to commit all the funding to specific properties by late September or early October and spend all the money by early 2013 or lose the dollars.

That might not be enough time. The program has been a work in progress and slow to ramp up. It was initially stalled by lenders who resisted selling at discounts to nonprofits and government. Another problem has been the competition - investors who can pay more for foreclosed homes and who nabbed good property prospects out from under nonprofits doing the negotiating work.

About 40 percent of the funding funneled to Long Island has been committed to specific properties, federal officials said, but that's faster than most projects across the nation.

More time has been a common request from those working in the program, one HUD official said. That would require congressional approval.

Half the homes in yesterday's tour were still boarded up or in the early stage of being gutted, while the other half were waiting for homeowners to close on their loans.

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