The Orange County Board of Supervisors Tuesday approved the use of slightly more than $1 million federal dollars still left over from the 2009 stimulus bill to turn two foreclosed homes into affordable housing.

The homes will be purchased and rehabilitated by Mercy House Living Centers, the Santa Ana-based nonprofit that runs the county’s emergency homeless shelters.

The money comes from the U.S. Housing and Urban Development Department’s (HUD) Neighborhood Stabilization Program (NSP), which was developed as part of the stimulus packages passed by Congress during the depths of the Great Recession.

This current allocation brings the total amount of NSP money that has flowed into the county in recent years to nearly $10 million. It also will be the last of that money because the program has run its course, said Karen Roper, director of county Community Services.

Roper said that as the local housing market has improved, it’s become more and more difficult to use the NSP funding because HUD has strict guidelines requiring it to be used in areas heavily impacted by foreclosure. Specifically, the homes must be purchased for 1 percent below their appraised value, Roper said.

“This is a really tough program once the housing market took a turn for the better,” Roper said. “Mercy House deserves kudos for being very proactive.”

The two homes, which are in escrow, are located in Anaheim and in unincorporated territory near Anaheim. One is a four-bedroom home and the other a three-bedroom. They were purchased out of foreclosure from Fannie Mae and Freddie Mac for $405,000 and $365,000, respectively.

Roper said Mercy House will have to spend up to $100,000 rehabilitating each of the homes before they can be put on the market as affordable rentals.

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