California's Riverside County has been one of the most punished areas in the U.S. housing crash and now local leaders are among the first in the nation with a program to buy foreclosed homes and sell them back to young families.

The city of Riverside is using money recently made available by the Obama administration to help communities lure buyers back to areas hit by a wave of foreclosures.

In recent weeks, Riverside began leveraging more than $6.5 million in federal Neighborhood Stabilization Program funds, added to its own redevelopment money, to purchase houses in the worst shape, fix them up and sell them to mostly first-time homebuyers. Other cities, like Chicago, are considering similar plans.

Where a lot of communities are trying to figure out how to spend the money, or offering purchase funds or down-payment assistance, we're actually very hands-on with our program, said Eva Yakutis, the housing and neighborhoods manager in Riverside, California, a working-class community of 300,000 about 60 miles east of Los Angeles.

We're making the purchase, we're overseeing the rehab, we're overseeing the sale of the properties. We're at the forefront of most cities or counties.

California's Inland Empire, made up of Riverside and San Bernardino counties, suffered some of the highest foreclosure rates in California during the housing meltdown, leaving behind thousands of boarded-up homes in blighted neighborhoods no longer attractive to young families even as prices dropped.

About 4,000 of Riverside's 60,000 homes are in foreclosure and twice that number are considered to be at risk. Some 28,000 owners, or 1 in 27 Riverside County homes, defaulted on mortgages in the first quarter of the year, 35 percent more than a year earlier.

Home prices, which were plummeting, have leveled off, thanks in part to bargain hunters and speculators -- but those aren't the buyers coveted by communities seeking to rebuild. To address those concerns, Riverside's program limits its participants to households with a combined income of $74,000 or less.

'BACK TO PRODUCTIVE USE'

You want to have stable, healthy neighborhoods, and part of that is home ownership or stable residents who are there to stay, Yakutis said. And from that you get strong schools. You get diminished crime. It's all related.

Chicago is moving forward with a similar program, identifying foreclosed properties that could be purchased, renovated and prepared for sale, city spokeswoman Molly Sullivan said.

Buyers' incomes must not exceed 120 percent of the area's median income, about $90,000 for a family of four. This is about stabilizing neighborhoods, Sullivan said. Getting vacant, foreclosed properties back to productive use.

The plan is to rehab up to 2,500 foreclosed homes in the Illinois city over the next three to five years.

Glendale, Arizona, a Phoenix suburb where many homes have gone into foreclosure, plans to use the bulk of its $6.1 million from Washington to acquire and rehabilitate foreclosed and abandoned homes, provide assistance to qualified buyers and develop rental housing for seniors.

When you have an abandoned home or series of abandoned homes, they can become an attractive nuisance, Erik Strunk, community partnerships director, said of the plan, which is expected to kick off in early summer.

There's also the maintenance issue, he said. The family was a victim of foreclosure. Now there's no one living there, so now you have the weeds starting to grow up, the door to the rear yard is unsecured. You may have a green pool here and there. It's demoralizing, it threatens neighborhood stability, and it will lower property values.

The Phoenix suburb of Avondale is helping with downpayments and closing costs to buyers of foreclosed homes. They also are providing federal funds to carry out repairs, such as fixing broken windows, replacing wiring and appliances stripped from empty houses.

Spokeswoman Gina Ramos Montes said the program will attract families back to the subdivisions.

What I am hoping to see in the next few years is that we really have owner-occupied homes in a lot of these foreclosures, she said.