Renovation work is under way on the first foreclosed home purchased by a city in the Coachella Valley, according to Indio city officials.

The city of Indio closed escrow on the house at 82-339 Golden Rod Drive in Indio in late September, making it the first desert city to purchase a home with Neighborhood Stabilization Program funds.

Cathedral City, Desert Hot Springs and Indio collectively were approved for $8 million in funds from the Riverside County Economic Development Agency Neighborhood Stabilization Program. The cities are expected to purchase foreclosed homes, fix them up and sell them to qualifying homeowners.

City officials say it wasn't an easy task at first, but Indio is on track to purchase about 20 foreclosed homes to rehabilitate and resell them by May.

“There were some challenges that everybody faced,” said Indio housing programs manager Jesus Gomez. “Now we're moving quite swiftly. And there's no stopping us now.”

Indio received $2.8 million to purchase about 20 homes.

In the beginning, Indio and other valley cities participating in the program were struggling to buy homes because of competition from cash buyers or investors, said Marcelo Lopez, a real estate broker with HomeFinders Inc., a program partner working with Indio to get people into the rehabbed homes.

“It's a completely different ballgame (now)” he said.

To help the purchasing process, a few of the major banks have begun to work with Indio by giving them a “first look” at available homes.

“A bank gives the city an opportunity to make an offer on some of their foreclosed inventory of homes before those homes are listed and made available to the public,” said Gomez.

That helped tremendously, he said.

Many of the processes including escrow and appraisals have been streamlined to speed up the process as well, Gomez said.

Still, because of the setbacks, the city missed its Nov. 1 deadline for the purchasing of homes per the agreement with the county.

“A lot of agencies did not meet that deadline, that milestone. However, in Indio's case, the county expressed and acknowledged our progress and that was favorable (for) us,” Gomez said.

County offices were closed Friday and officials could not be reached for comment.

Gomez said the important deadline to not miss is May 1. That's when the homes must be rehabbed and transferred to new homebuyers.

“Ultimately the money has to be spent by May 2010,” he said. “There still quite a lot of work involved but the things that were slowing us down in the process have been addressed.”

Waiting list

In addition to cleaning up neighborhoods hit hard by foreclosed and blighted houses, the program is meant to help put low- and moderate-income families into the homes.

Lopez has a list of about 50 people who are interested in purchasing a home in Indio through the Neighborhood Stabilization Program.

“It's perfect especially in these trying times. That's what they need,” he said.

Some of the houses being purchased by the cities at one time were selling for between $300,000 and $350,000, said Lopez.

“For people to walk into these homes at $120,000 — it's an incredible opportunity,” he said.

The cities cannot make a profit on the homes and can only sell them for the price they paid plus the rehabilitation costs.

The city of Indio paid $114,000 for the Golden Rod Drive house and plans to make about $`16,000 in improvements. Therefore, the house won't be sold for more than $130,000, said Gomez.

Indio officials anticipate handing the home over to a buyer by the end of the month.

The city also has two other homes in escrow and five others that will soon enter the escrow process.

“We have made substantial progress,” Gomez said.

Xochitl Peña covers Indio and Coachella for The Desert Sun. She can be reached at (760) 778-4647 or at xochitl.pena@thedesertsun.com.