The trouble for states and localities eager to leverage the Neighborhood Stabilization program is getting to the houses faster than investors and homebuyers.

"Getting hold of the houses, especially the right houses, can be a lot harder than they thought," says housing expert Alan Mallach, a non-resident senior fellow at the Brookings Institution, as quoted on CNN Money – "They are finding there's a lot more competition for these properties, and they are losing out to investors."

There are 2.5 million homes in the foreclosure process, with about 750,000 in the hands of banks, according to Mark Zandi, chief economist with Moody's Economy.com. As many as 4 million foreclosed homes will be sold by the end of 2011, he estimates.

To prevent these homes from falling in disrepair, being vandalized and becoming eyesores in their communities, the government invested $1.9 billion as part of February’s stimulus package. This money is still to be distributed.

Mercedes Marquez, assistant secretary at the Department of Housing and Urban Development, believes the program is on track. "It's a lot of work to implement," said Marquez.

The larger cities, with the right staff and experience to get the job done, have already turned many properties into livable homes. Others have not yet bought a single house.

Read the full CNN Money article here.