Foreclosures: Illinois Town Invests in Them

Foreclosed homes can bring down the value of neighboring homes and otherwise be a blight on the community if they sit vacant for an extended period of time. That's why the town of Cicero, Ill., a Chicago suburb, is buying up bank-foreclosed properties, rehabbing them and selling them back to residents as subsidized housing.

"We do not want these foreclosed properties to go unattended and turn into hangouts for gangs or drug dealers," said town president Larry Dominick. "I do not want these homes to turn into eyesores that impact their neighbors."

Cicero, which was hard hit by floods that took place July 24 and was the largest suburban recipient of $10 million of federal flood assistance from FEMA, so far has purchased three foreclosed properties.
One currently for sale for $183,000 via the town's website (pictured above) has been renovated. The three-bedroom, two-bath home at 2724 S. 58th Court has an unfinished basement and a 2.5-car garage. The kitchen has granite countertops and includes energy-efficient appliances.

The first house that sold (pictured left) was a gut rehab and sold to a family for $179,000. It is across the street from the one now for sale.

The third property, which has an adjacent vacant property, will be converted from a single family home into a town house duplex.

City officials believe the homes will move a lot faster, and will be in better condition than if a bank maintained control of the homes.

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"Letting homes come under the care of a bank is a bad idea. They don't take care of the homes. And the homes can become magnets for trouble," town spokesperson Ray Hanania told HousingWatch.

"We do not want people to lose their homes and we don't get involved until a home is taken over by the bank," he said. "But we do have an obligation to the residents in the community where the homes are located to help prevent them from becoming problems. Mortgage foreclosures rarely move quickly."

Interested buyers must meet income criteria. A one-person household buyer must have an income of no more than $63,650. A four-member family could earn up to $90,000. A six-member family could earn up to $104,000.

Buyers might even qualify for a 20 percent down-payment subsidy of $36,600.

The town does not make a profit on any of the sales, but is permitted to recover acquisition costs and costs of construction, says Hanania. All proceeds are recycled back into the program to continue the process of acquisition, redevelopment, and sale.

The teardown (pictured left) that will be the site of the proposed duplex will break ground this Thursday. The new homes will have three bedrooms and 2.5 baths. The units will each have a two-car garage and will sell for $160,000 each, including appliances.

For more on foreclosures and related topics see these AOL Real Estateguides:

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