Forty houses repossessed from people who used to live in them may soon be bought by Salt Lake County's Housing Authority and given to low-income families.

In return, the families would have to restore the houses many of which are in terrible shape using both do-it-yourself efforts and loans with an interest rate of only 3 percent.The families must promise to live in the houses at least five years, at which time the county will officially transfer ownership.

If successful, the program will restore decaying neighborhoods and help floundering families regain dignity, officials say.

"We have a lot of people a lot who used to live in those houses who are homeless," said Boyd Hansen, chairman of the authority. Those people have jobs but earn too little to qualify for a conventional loan.

But the program hinges on a $1.3 million grant from the federal government. County commissioners agreed Monday the authority should apply for the grant. Although money for similar programs has been scarce, officials said they expect an OK from Washington, D.C., within 30 days.

"We're getting good vibes from Washington," Hansen said.

Because there are many more needy families than there are houses, families must be screened, take classes on home ownership and budgeting and survive a lottery before they can buy one of the houses.

"We've got to narrow it down and make it so the people who get the houses are responsible homeowners," Hansen said.

The families will have to earn less than 80 percent of the state's median income. A family of four, for example, could not qualify if it earned more than $27,850.

"Our real objective is to get people who could not normally qualify for a loan under any condition," Hansen said. "They will have to be able to pay off the loan we give them."

All the houses have been repossessed from owners who failed to make payments. All are in Kearns, Magna, South Salt Lake or Murray and have survived auctions and other attempts to find owners. None are worth more than $34,000.

Loan payments will probably be about $100 per month, and most of the houses need repairs costing between $8,000 and $15,000, said John Godfrey, director of the authority's housing rehabilitation division.

"There's no question we will be renovating some trashy houses," Hansen said. But all the houses are the kind that can be made nice with a little work.

A family buying one of the houses will have three years to make necessary repairs. They can cut costs by doing work themselves, provided they have the skills.