Many non-profit groups are buying foreclosures at a discount before they go on the market for speculators.
Redevelopment agencies are working with non-profits to try to revitalize neighborhoods affected by a rash of foreclosures, but their efforts are tiny compared to the millions of foreclosed homes headed for the open market in 2011.
Under an expanded agreement announced in September between the federal government and banks that provide about 75 percent of all U.S. mortgages, as many as 100,000 more repossessed homes will join those already being pumped into the nonprofit and redevelopment agency pipeline.
That deal started in 2008 as a pilot program to provide foreclosed homes to cities and nonprofits that could renovate them for low- and moderate-income families. About $7 billion in federal funds has been allocated to the program.
But the discount program will only handle a small percentage of the foreclosures expected in the coming years. Banks seized more than 980,000 homes nationwide through the first 11 months of 2010 and will likely take back a million more next year, according to foreclosure listing firm RealtyTrac Inc.