The tan two-flat at 3551 W. Douglas Blvd. may seem almost indistinguishable from its neighbors on this block in North Lawndale. But it’s not.

Recently renovated and ready for its new owner, the building is one of six homes in North Lawndale that has been rehabbed through the $4 billion government-funded Neighborhood Stabilization Program, a federal initiative to help combat the national foreclosure crisis.

In a neighborhood characterized by stagnation, this modest home is a sign of renewal. Long one of the city’s poorest and most violent areas, North Lawndale has shrunk by more than three times its peak population, from roughly 120,000 in 1960 to about 40,000 today. The area’s housing situation-along with safety, education and incarceration rate-remains dire.

“Before anybody can start building anything new, they need to clean up the homes already there. That’s the first step. That’s the foundation,” argues Larry Kimbrough, who manages home sales for the North Lawndale-based nonprofit, Breaking Ground.

The organization is renovating five buildings in the neighborhood via the program funds, including the property on Douglas Boulevard. In 2008, Congress and then-President George W. Bush signed into law a recovery act that included an allotment of funds to the U.S. Department of Housing and Urban Development for neighborhood stabilization. It is intended to help communities curb high foreclosure rates by giving grants to developers who invest in foreclosed homes.

“We want to be able to step in and soften the landing of the downturn as opposed to have it completely crash,” said William Towns, vice president of Mercy Portfolio Services-the nonprofit organization is responsible for distributing Neighborhood Stabilization Program funds in Chicago.

Chicago currently has the second-highest number of foreclosures of any city in the nation, according to Realtytrac.com. The Illinois Foreclosure Listing Service reports that 63,500 foreclosures have been filed citywide from January 2008 through October 2010.

The city received $55 million in the first round of funding and $98 million in the second. The latter round came as part of the American Recovery and Reinvestment Act of 2009. A third round of stabilization money, awarded in October, put the total allotment for Chicago at almost $170 million.

The grant money must be invested strategically because the funds, while substantial, are limited and will run out in several years, Towns said.

In North Lawndale, the funds have been used by two groups: Breaking Ground, with its five homes, and the Lawndale Christian Development Coalition, which is working on rehabbing one 15-unit apartment. Breaking Ground has spent about $150,000 per home, its organizers say, while the Lawndale Christian plans to invest $1.5 million in its building.

Homes in North Lawndale are selling for an average of $43,500. That’s about one-fifth the city’s average home sale price, according to real estate tracking website Trulia.com. That’s down more than 22 percent from last year’s average sale price in the area. In total foreclosed homes, North Lawndale ranks among the top half of Chicago’s neighborhoods in total foreclosed homes, according to the website, and local activists say the impact reaches farther than the numbers may indicate because many properties are multi-unit buildings occupied by renters.

The foreclosure crisis of the late 2000s hit North Lawndale hard, Mabel Guzman, president of the Chicago Association of Realtors, recalls. The association has been involved in the neighborhood stabilization funding process. Guzman has a personal connection to North Lawndale-she lives there.

North Lawndale, like other communities hit hard by foreclosures, has to dig itself out of a housing hole, she said.

“When you see the rate of foreclosure go up, you see less activity,” she said.

Kim Jackson, executive director of the Lawndale Christian Development Corporation, said her group decided to apply for stabilization funds after she received calls for help. Those came from community members in foreclosed rental units who were getting eviction notices.

More than 1,000 housing units in North Lawndale, or about 7 percent of all units, are impacted by foreclosure, she said. The organization is putting $1.5 million into the building it is developing at 1863 S. Lawndale. But fixing up one building alone is not enough, she insists. And she doesn’t believe the community is getting the funds it needs.

“There is more work to do,” she said. “Funding foreclosure efforts are no longer on the radar.”