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Three vacant, run-down homes on Buffalo's East Side will be torn down this summer as part of a new strategy for dealing with decaying, inner-city housing owned by the federal government.

The three homes, each a neighborhood eyesore, will be demolished by the U.S. Department of Housing and Urban Development.

HUD, which acquires hundreds of properties each year through mortgage foreclosure, has come under criticism for its management, maintenance and marketing of HUD-owned homes in Buffalo.

"This could be a big win for the city," said Stephen T. Banko III, director of HUD's Buffalo office. "This allows the city to pick up plots of land at a discount and then control the disposition of it."

Under the new strategy, HUD will demolish any HUD-owned home valued at $10,000 or less and then sell the vacant lot to City Hall. One of the goals is to address the problem of real estate speculation in the inner city.

To further help with the problem, Buffalo is seeking designation as an "asset control area," a six-year-old HUD program for foreclosed housing. The designation would allow the city to buy HUD housing at a discount, rehabilitate it and then sell it to low- and moderate-income families.

The program, used in nearby Rochester, has a mixed record of success. HUD suspended the program in 2002 because of mismanagement problems in several cities but has since reinstated it.

Again, the goal is to deal with the influx of Internet real estate sales in Buffalo and a not-so-new real estate trend known as "flipping," the practice of buying low-priced property and quickly selling it at an inflated price without making improvements.

Housing activists claim HUD has become a knowing partner in the flipping practices of out-of-town speculators, many of them from as far away as Las Vegas. In many cases, those same speculators resell the homes on eBay within weeks after buying them.

"The flipping issue is something we can't stop," said Timothy E. Wanamaker, the city's commissioner of strategic planning. "But this designation by HUD would help us gain more control over some of these properties."

The criticism of HUD's involvement in Internet flipping is a new twist to an old complaint. For more than three years now, neighborhood activists have complained about the federal government's management and marketing of its inner-city housing.

Activists who track HUD's Internet sales claim the federal agency sells as many as seven to 10 houses a week and that most of those bought by out-of-state investors are then flipped on eBay, a popular marketplace for buyers.


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