March 17, 2000

Cuomo and Kasich Announce HUD Policy to Sell Homes to Local Governments for $1 Each

Washington — The Department of Housing and Urban Development launched a new initiative to sell local governments thousands of HUD-owned homes for $1 each to create housing for families in need and to benefit neighborhoods.

HUD Secretary Andrew Cuomo and Congressman John Kasich of Ohio announced the new HUD Good Neighbor Policy today and said it is good for neighborhoods, communities and families.

Under the policy, single-family homes that are acquired in foreclosure actions by the Federal Housing Administration (which is part of HUD) will be eligible for sale to local governments around the nation for $1 each whenever FHA is unable to sell the homes for six months. About 3,000 homes will initially be eligible for sale to local governments under the initiative, which additional homes available for sale each month.

"The Good Neighbor Policy will build better futures for hundreds of communities and thousands of families across our nation," Cuomo said. "It will help reverse decades of decline in our cities by revitalizing neighborhoods, attracting new residents, and promoting homeownership."

"I think this policy is going to provide huge benefits for America and America's families," said Kasich, who is Chair-man of the House budget Committee. "I hope there can be more instances when Members of Congress and officials from the Executive Branch can work together to develop and implement ideas like this one that achieve the common good."

By selling vacant homes for $1 after six months on the market, HUD will make it possible for communities to fix up the homes and put them to good use at a considerable savings. The newly occupied homes can then act as catalysts for neighborhood revitalization, attracting new residents and business to an area.

Local governments buying HUD homes for $1 can sell or rent them to low- and moderate- income families, to first-time homebuyers, or to groups that will use the homes to provide services such as child care centers or job training centers.

Homes in extremely deteriorated condition, where rehabilitation is not feasible, will be demolished by HUD and the vacant lots will be offered for sale to the local government for $1.

The initiative won't cost taxpayers a penny. Because of improvements in FHA management and because few FHA-insured home loans default, FHA's revenues exceeded expenses and the agency returned about $1.5 billion to the U.S. Treasury in 1999.

The Good Neighbor Policy complements a system HUD instituted 10 months ago under which contractors rather than HUD employees sell FHA-owned homes. Under this system, the average time it takes to sell a home has dropped by 38 days and the amount of money HUD recovers from each sales has increased by an average of $4,500 per home. With more than 50,000 sales to date, the new system has saved HUD more than $225 million.

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