What will Elgin do with $2.2 million in foreclosure aid?

Local groups are voicing their opinions on how to spend $2.2 million in federal money to help Elgin deal with a rash of foreclosures.

The money comes from a $3.9 billion pie being split up by the U.S. Department of Housing and Urban Development through its Neighborhood Stabilization Program.

City leaders expect to receive the cash early next year. It may be used three ways: to buy and group several small lots into one large one; to rehab and resell or demolish abandoned and foreclosed homes; or provide buyers with down payment assistance or help with closing costs.

Bill Klaves, development director for the Habitat for Humanity of Northern Fox Valley, said the city could get more mileage out of the money by working with his group instead of just buying foreclosed home from a bank.

Klaves said the group works with volunteers and low-income families to build a home and encourage responsible ownership.

"The impact on the community is more than just a house. It's building a community spirit," he said, adding: "We already have a proven program that knows how to vet homeowners, knows how to counsel homeowners and will allow (the city) to leverage the funds by bringing to bear other financial resources that we use every day when we build a house."

Kathy Hazelwood, vice president of the Association for Individual Development, which provides affordable housing to people with disabilities or mental illness, also has asked that the city consider the Elgin group when doling out funding.

Jim Durante, an Elgin real estate agent, said 100 percent of the funding should go toward housing, not administrative items such as classes for new homeowners.

Durante noted there are more than 160 homes in Elgin that are priced at less than $150,000, foreclosed upon and owned by banks. He urged the city to resell homes only to qualified buyers.

"Just a home with a good deal is not going to make the payments itself," Durante said.

City Councilman David Kaptain said some local churches and other groups have volunteered labor to help with future rehabilitation projects.

"I think we need to take advantage of those opportunities to stretch these dollars," he said.

City council members have not had any formal discussions on how to spend the money, but staff members have said they prefer the funds be used to buy and rehab clusters of homes in the near west and near east side neighborhoods that have been hit hard by foreclosures.

The money can't be used to help homeowners on the brink of foreclosure.