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Advocates of more housing for low-income families in the county are encouraged by a federal program that looks to swap scores of "foreclosed" signs with "for rent" signs, mainly in Aspen Hill and Germantown. But some in those hard-hit communities are skeptical of a plan they say precludes homeownership and boxes out private investors.

Montgomery County has been awarded a little more than $2 million of the $400 billion Neighborhood Stabilization Program passed by Congress that will allow the county to purchase foreclosed homes for use as rentals for people who make less than 50 percent of the area median income — less than $50,000 for a family of four in Montgomery. The county housing department has applied for an additional $7 million from the state's share of the federal money.

Supporters of the program say having the government purchase many of these homes will help keep neighborhoods vibrant by reducing the number of vacant houses and curbing blight. Germantown, Aspen Hill and Montgomery Village have all been identified as foreclosure "hotspots" and will be the primary targets of the program.

"I'm not encouraged, and I wouldn't encourage it," said Alexandra Minckler, president of the Aspen Hill Civic Association. "I do feel strongly that [a] program toward home ownership would be a better fit for our neighborhood." She said homeowners tend to take better care of their property because they have "a vested interest" in doing so, and long-term residents are better able to "grow a sense of community."

Lawrence Evans, a Germantown Realtor and former president of the Germantown Alliance civic group, is also skeptical. "I would think if the government got involved in this kind of project, however good their intentions are, they're going to make it less attractive to investors," he said.

While Evans acknowledges a foreclosure problem in Germantown, estimating 30 percent of the homes for sale there are foreclosed or short-sells—homes being sold to avoid foreclosure — he's concerned about the potential for boxing out cash-rich investors who see the potential for good deals and might rehabilitate and resell or rent the homes themselves.

He said such investors are addressing the need for more rental properties, noting the increase in such properties in Germantown has been "about 100 percent" of late.

He called the program an example of a decision "made by people in a high rise."

But Montgomery is continually ranked second and third in foreclosure activity in the state, said Rick Nelson, the director of the county's Department of Housing and Community Affairs, and having homes sit vacant can lead to crime and depreciation in property values.

"It's a housing and safety thing, it's an economic thing, and we're just trying to use the money to help as much as we can," Nelson said.

If granted the additional $7 million in funding from the state, with the current $2 million and a $3.5 million pledge from the county government, the program would have roughly $13 million. With that, Montgomery County would be able to purchase about 40 to 50 houses, not a large number according to Nelson.

Patricia Kaczmarski, a co-chair of the multi-faith organization Action in Montgomery, which advocates for low-cost housing, said a home next door to her own moderately priced dwelling unit in Gaithersburg has sat empty and "decaying" for months. She doesn't know if the house was foreclosed, but said any program that puts a vacant house to use is "a no-brainer."

"Housing is very expensive in Montgomery County, even for average workers but especially for people who are low-income. This is an issue in Montgomery County that goes way back. People that work here can't live here because they can't afford it, while these houses are deteriorating and people need houses," Kaczmarski said. "To me it is a perfect match."

Minckler, of Aspen Hill, isn't so sure. She said she fully supports Housing and Urban Development programs that provide a path to home ownership, but doesn't regard a community of single-family homes such as Aspen Hill as "one that should be rife with rentals."

The deadline for applying to the state for an additional share of the federal money is Thursday. Nelson said it will likely be March before the county learns how much more funding it will get. Once the money comes through, the county housing department will begin looking for foreclosed homes that can be purchased at a discount immediately. The program is expected to commit all funds within nine months to a year of receiving them, he said.

Nelson said no specific neighborhoods within the Germantown and Aspen Hill areas have been targeted yet, and how the balance of home acquisitions plays out will depend on the market.

"Once we get the ability to go out and purchase we'll be looking at what's available and at what price," Nelson said. "Both areas have significant problems."