HUD-owned homes to be restored and resold.

Mayor Michael R. Bloomberg and U.S. Housing and Urban Development Secretary Alphonso Jackson announced an agreement to restore up to 360 one-to-three-family homes in New York City and resell them as affordable housing for approximately 650 families.

The City and its non-profit partners will purchase homes in distressed communities that are owned by the Federal Housing Administration as a result of the Asset Control Area agreement, a 1998 Congressional initiative whereby FHA sells its foreclosed homes in designated areas to municipalities and experienced non-profit developers at a discount.

Often HUD-owned homes have major repair needs, including nonfunctioning heating, plumbing and electrical systems, damaged roofs, kitchens, bathrooms, illegally converted basements and unventilated bedrooms.

"An alarming trend has been allowed to go on for far too long: developers have sold dilapidated homes to struggling working families who collapse under the weight of financing home repairs and meeting mortgage payments," said Bloomberg.

"These homes then fall into the hands of the federal government only to have the cycle repeated when private developers purchase these homes on the public market. Today's agreement between the City and the federal governments and our community partners will allow working families to buy high-quality housing."

Starting in early 2006, Restored Homes will buy 60 properties they have identified from HUD. The money raised from selling these homes will help to subsidize the acquisition and rehabilitation of the 300 homes in the Asset Control Area. The Asset Control Areas include Bedford Stuyvesant, East New York, Bushwick and Cypress Hills, Brooklyn, Jamaica, Queens and the North West Bronx. Starting in mid-2006, Restored Homes will buy and rehabilitate up to 150 Asset Control Areas homes per year for two years, with HUD selling the properties to Restored Homes for 50% of their value.

Restored Homes will have 18-to-24 months to rehabilitate, market and sell homes to qualified homebuyers who must become owner-occupants. Homebuyers will be moving into their rehabilitated homes between 2008 and 2010.

The properties will be sold to eligible buyers by a lottery, supervised by HPD. The properties will be affordable to families earning no more than $72,000 for a family of four. The lottery will include a 33% preference for qualified veterans who have been in active military service at any time since September 11, 2001--the first veterans' preference in any City housing lottery. Other standard New York City preferences will also apply.

Acquisition and construction costs will be funded through a $145 million loan pool, with money contributed by Enterprise Social Investment Corporation, LISC, the City of New York and major financial institutions. HPD will contribute $15 million, and Restored Homes' community partners will assist with the repairs. The partners will be selected through a Request for Qualifications process.