The Department of Housing and Urban Development is distributing almost $4 billion to states and local communities to help remove foreclosed upon or abandoned properties from the market in a process aimed at stabilizing neighborhoods that have been hit hard by the current housing crisis.

Included in the Housing and Economic Recovery Act passed this summer, is the Neighborhood Stabilization Program (NSP) where builders may find opportunities to rehabilitate or redevelop troubled properties that had been foreclosed or abandoned.

Following rules established by HUD, the homes can be acquired and rehabilitated, or if they are too deteriorated, they can be demolished and redeveloped.

The fund is also intended to provide financing for eligible households in buying these properties, and can be second loans. The properties will be sold to households earning up to 120% of area median income.

Residential properties being rehabilitated must abide by the local health and safety standards. Measures that may lead to better energy-efficiency as well as conservation improvements are eligible rehabilitation costs.

While the law does not permit any entity to make a profit on the sale of any of these homes, builders may earn developer fees as part of the rehabilitation or redevelopment costs. Builders may contact their local or state government to find out the opportunities that might be available for them or how will the program be implemented.