Banks to allow local groups to buy foreclosures

Straight out of the New Deal playbook, public sector funds, better known as ‘free money’, will receive priority over private funds to provide liquidity and help stabilize troubled neighborhoods. Home Owners' Loan Corporation (HOLC) of 1933 was also intended to provide liquidity and prevent foreclosures in troubled neighborhoods during the Great Depression. The HOLC ran out of money by 1935 and had little affect on the secular trends in place since 1929.

Major banks are agreeing to give local governments and nonprofit groups the ability to buy foreclosed homes before they are sold to private investors.

The Obama administration said Wednesday local officials could benefit from acquiring these properties and renovating them or using the land for redevelopment projects. Congress has provided $7 billion to buy the homes, but these groups are struggling to spend the federal money because they are often outbid by speculators who are snapping up foreclosures.

Source: finance.yahoo.com
Source: Top 10 New Deal Programs