By Keith Reid, The Record, Stockton, Calif.

Oct. 30--MANTECA -- Robert and Catherine Smith endured months of frustration in their attempt to purchase a home in Manteca.

Those frustrations are now history, as the Smiths this past weekend moved into a three-bedroom, two-bath home on Tioga Way. They are the first family in San Joaquin County to close escrow under the U.S. Department of Housing and Urban Development's Neighborhood Stabilization Program.

"I couldn't be more tickled if I had a feather," said Robert Smith, 49, a truck driver. "Look, the house is not the Taj Mahal, but it suits our needs perfectly."

After renting for eight years, the Smiths pre-qualified for an FHA loan and went forward to make offer after offer on homes in their price range, under $200,000.

Each offer produced more frustration. They were continually outbid by real estate investors, Robert Smith said.

That's when their mortgage broker referred them to a nonprofit organization called Stocktonians Taking Action to Neutralize Drugs, a group that has long purchased and restored houses as a means of raising money to clean up Stockton neighborhoods.

The organization also is one of several local nonprofit groups that have tapped into $21 million in local funding from the Neighborhood Stabilization Program. The federal program provides cities and counties with down payment assistance to first-time home buyers, and it provides cash to nonprofit groups such as STAND or Stockton's Visionary Home Builders. It allows such organizations to purchase, remodel and resell homes to qualified buyers.

In the Smiths' case, the Stockton organization purchased the Tioga Way house for $102,000 and spent $29,000 for upgrades. The Smiths purchased the home for $157,000 with a 1 percent down payment and a small second loan through San Joaquin County to make up the difference in the required 3.5 percent down payment and closing costs, STAND housing specialist Fred Sheil said.

"It really is a pretty amazing program," Sheil said. "There is so little inventory, and so little competition that people with FHA loans are really struggling. This program is a great opportunity for them."

To qualify for such assistance, a potential home buyer must be considered a first-time home buyer through HUD. They must also be pre-qualified by a certified lender and fit into a specified income bracket. For example, a family of four's income can't exceed $76,000.

Representatives of the Stockton group say they have 18 other homes in escrow and 13 on the market. All have gone through remodeling efforts.

"We need to move the houses so we can cycle the money back through and go through another cycle of buying and rehabbing," said Terrence Hull, of W.T. Hull Co., a property management and real estate firm working with STAND. "We think we can help up to 100 home buyers, which isn't a major piece of the market by any means, but every little bit helps."

Contact reporter Keith Reid at (209) 546-8257 or kreid@recordnet.com.

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