A federal program to sell government-owned, foreclosed homes in Utah has been brought to a halt by a lawsuit filed by a homeless advocacy group in Washington, D.C.

Richard Bell, manager of the Salt Lake Housing and Urban Development office, said the suit's timing was especially disappointing because for the first time in years, the number of foreclosed homes held by the government was waning."We can probably weather two weeks with it being shut down," said Bell. "If it goes beyond two weeks we're going to suffer sizable losses."

Earlier this week, a federal judge issued a temporary restraining order stopping HUD from selling properties obtained by foreclosure. A homeless advocacy group sought the order and is asking the court to require the government agency to use its surplus property to provide shelter for the homeless.

Further arguments in the case are to be heard Sept. 14 in Washington, D.C.

"Our whole program is in limbo," James Nistler, HUD's deputy assistant secretary for single family housing, said in Ogden Thursday.

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Nistler said the dispute may not be solved without congressional intervention.

Builders and real estate agents in the state have encouraged HUD and the Veterans Administration to reduce their inventories as quickly as possible - without reducing prices below the going market rate - to help improve property values and increase demand for new construction.

In Utah, HUD's list of acquired homes peaked in May at 1,100 and had dropped below 900 last week. It stood at 915 this week and will continue to rise as long as the agency is forbidden to continue its program, said Bell.

HUD, through the Federal Housing Administration, provides mortgage insurance. If lenders are forced to foreclose on buyers, FHA will buy the property from the lender and sell it itself. The Veterans Administration runs a similar program.

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