On Monday, the Department said a recently signed contract between the Federal Housing Administration and a California non-profit that agreed to buy and rehab up to 600 HUD-held single family properties in Los Angeles, signals that the FHA's revamped Asset Control Area program is "back in business."

The program sells to local governments and non-profits deeply discounted HUD-owned properties obtained through foreclosure in designated revitalization areas. The properties are then rehabilitated and resold to low-to-moderate income families.

The Department suspended the two-year old trial program in 2002 following an Inspector General's audit that found poor management controls resulting in violations in several of the program's 16 participating cities.

The audit revealed some ACA operations had been turned over to for-profit developers, some homes were sold at prices higher than permitted in the program, and other homes were sold without rehabilitation.

Following the audit, an internal HUD task force revamped the program by implementing a number of changes to boost accountability, including requiring participants to resell properties to income-eligible buyers within 18 months of acquisition and requiring participants to have an annual HUD compliance review/audit performed by a third party.