More cities are faced with the question: What should happen to the vacant homes left behind from the foreclosure crisis?

On a national level, the Treasury Department, the Federal Housing Finance Agency, and the U.S. Department of Housing and Urban Development are working on a program to transform single-family foreclosed homes into rental properties. The federal agencies are not releasing details yet of how the program will work, but an REO rental program for Fannie Mae, Freddie Mac, and the Federal Housing Administration properties is expected to take shape sometime this year. 

Until then, some cities are taking matters into their own hands. In Chicago, city officials have launched a program to rent out foreclosed condos and turn them into affordable apartments. City officials are selling entire buildings to investors and developers of vacant, foreclosed condo units, as the investors vow to rehab the condo units and then rent them out, the Chicago Tribune reports. 

In exchange, the lenders, who typically own the units when they are in foreclosure, receive a share of the proceeds from a sale after any liens have been removed. 

So far, about 150 condo buildings in the city are in the process of being converted into apartment buildings. What’s more, Community Investment Corp., a nonprofit mortgage lender in the city, estimates more than 250 buildings also could be salvageable in the city through the program. 

"We're trying to make use of these buildings instead of losing them," John "Jack" Markowski, president of Community Investment Corp., told the Tribune. "All we want to do is put the property back together and restore it back to the rental housing stock of the city."

Source: “Chicago Program Turns Vacant Condo Buildings into Affordable Rentals,” Chicago Tribune (Jan. 6, 2012)