Got an eye for a rundown home's potential but not quite the bankroll to fund it? Let the government help.

One of the results of the enfeebled economy was the foreclosed-home epidemic that swept the country and left otherwise healthy neighborhoods with eyesores on their streets.

In July 2008, the U.S. Department of Housing and Urban Development decided to do something about it.

The Neighborhood Stabilization Program, which is sponsoring a City Living home tour this weekend, helps a buyer purchase and rehabilitate a vacant or foreclosed house, and turn it into the home of their dreams. Here's how it works:

After a potential home buyer is approved and qualified by the city for the program, they (with the assistance of a Realtor) set out to find a house that has been either vacant for 90 days or been foreclosed upon.

The buyer then will secure a development team, or builder, who will help design a custom rehabilitation plan to get the house to meet the buyer's needs.

The development team then buys the house on behalf of the buyer, and begins to rehabilitate it.

Some time later, the buyer closes on the property, takes ownership and as quick as you can put a key into a front door lock, the surrounding property values boom.

At least, that's the idea. The kicker is, that's not even the best part.

The city will invest 150 percent of the home's as-completed value. That means the city will invest more than the house is worth in the end, and that money does not have to be repaid.

For example, if a buyer purchases a house out of foreclosure for $50,000, and after it is fully rehabilitated it's assessed at $100,000, a participant in the NSP can pay $50,000 for the home, put an additional $100,000 into it, and, when they bring the $100,000 bank loan to the closing table, it's a done deal and the city will cover the remaining $50,000 balance.

“The point of the program is to head off the issues that emanated from foreclosures in neighborhoods,” said Heather Presley, deputy director of the city's Housing & Neighborhood Services division.

“HUD came up with a program that addresses those foreclosed and vacant units to help buyers buy and custom- rehabilitate them. The overarching objective of the program is to increase sales in our poor neighborhoods, and to increase the values.”

As it turns out, the program is a win-win-win-win, Presley said. Not only does the buyer benefit with basically a brand-new home, the developers, real estate agents and neighbors all make out well, too.

The developers, as part of the program, get an automatic 20 percent cut as a developer's fee, and the Realtor gets in either $6,000 or 6 percent.

The neighborhoods, however, are the real winners, Presley said.

“The home buyer that finds that home in the neighborhood and takes that vacant unit off the street actually helps to improve the entire street because, as it was sitting there, it might have been only worth $50,000, but at the end of the day that home is worth $100,000,” said Presley. “They just raised the values in that neighborhood.”

There are 15 to 16 homes actively being rehabilitated in the program, and 26 buyers are enrolled in the purchasing process, Presley said. On the back end, completed homes are showing value of 40 percent to 50 percent more after rehabilitations are completed than they were in the beginning, she said.

The success of the $7 million program, Presley said, has led the city, which has one of the country's most successful programs, to apply for $62.14 million more in funding in hopes of undertaking the effort on a larger scale.

“It's stabilizing the values in the neighborhoods, and it's also helping buyers buy and rehab houses they otherwise wouldn't have been able to get into,” Presley said.

The Neighborhood Stabilization Program is based on income. Home buyers must meet income guidelines that are capped, for a family of four, at $73,000 annually. Other guidelines and restrictions can be found at www.nspfortwayne.org.