The Chicago, Illinois-based nonprofit affordable housing builder, Mercy Housing Lakefront has sought the assistance of Kane County to purchase and rehabilitate REO properties for sale.

The nonprofit organization proposes to buy and redevelop foreclosure properties in Kane County communities severely affected by the foreclosure problem. These are Aurora, Carpentersville, Elgin and St. Charles.

Under the proposal presented by Mercy Housing to federal housing administrators and Kane County officials, it would invest about $16.7 million to buy and redevelop 72 multi-family REO properties for sale in St. Charles.

The nonprofit also plans to buy and redevelop about 95 single-family houses in Aurora and 60 single-family houses each in Elgin and Carpentersville. Mercy Housing also proposes to build 95 multi-family homes in Aurora and 60 multi-family homes each in Elgin and Carpentersville.

All in all, Mercy Housing’s plan to buy and redevelop REO properties for sale would entail it to spent $99.5 million in the area.

However, the implementation of the plan hinges on the nonprofit organization’s capacity to obtain $74 million in federal funds earmarked specifically to help public and private non-profit organizations to buy vacant, blighted and foreclosed houses in communities severely affected by the foreclosure problem.

The federal program, Neighborhood Stabilization Program 2 (NSP2) has released nearly $2 billion and made it available to non-profit organizations to purchase repossessed homes in order to stabilize market values and strengthen the housing market while providing affordable housing in communities affected by the foreclosure crisis.

The initial version of the NSP allocates about $5 billion to local governments to allow them to buy and redevelop foreclosure homes in troubled neighborhoods.

Mercy Housing Lakefront’s real estate development senior vice president Scott Fergus said that the organization has applied for federal funding and is expecting to hear from the U.S. Department of Housing and Urban development (HUD) before the end of this year.

Other sources of funds include debt financing and $16 million in private activity bonds issued by the Kane County Board.

Fergus explained that the bonds would not require taxpayers’ money and would not put Kane County at financial risk. He added that for two years, Mercy Housing has been seeking to expand its rehabilitation activities from the city of Chicago to the Fox Valley area.

Furthermore, he said that Mercy Housing chose the four communities because they accounted for more than half of the total REO properties for sale in the county.