Urban Homesteading

Because of interest by Congress, local governments, the news media, and others, a review was made of the Department of Housing and Urban Development's homesteading program. The program transfers abandoned houses in deteriorating neighborhoods that it has acquired through foreclosure to the communities. The communities, in turn, give them to individuals who must repair them and live in them for 3 years to become owners. The program has helped reduce the inventory of vacant houses owned by HUD while providing communities with the opportunity to improve their neighborhoods. It has made homeowners out of some who might not have been able to afford to buy a house.

The review found that some communities used unique and effective approaches to homesteading. In nearly every homestead neighborhood, there were houses that stood out as newly repaired and well cared for. However, some problems were observed. The time it took to homestead varied, reflecting the condition of the houses, the extent of necessary repairs, and the availability of financing and contractors. Timely disposition of the houses by HUD has varied from program to program. Where cooperation between local officials and HUD was effective, the programs were more successful. Two communities reviewed departed from ideal homesteading: one contracted for repairs and then sold the houses at a subsidized price, and the other continued the program even after the housing market had improved. HUD was only beginning to operate an administrative reporting system and to establish a monitoring system. These systems could have disclosed the questionable practices.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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