Eleven new houses for low and moderate-income families soon will be built in the Athens County community of Chauncey, thanks to a grant from the Affordable Housing Program of Cincinnati's Federal Home Loan Bank.

Under the plan, which is called the Meadow View Homeownership Project, the new three-bedroom, two-bathroom homes will be made available to qualified buyers through low-interest loans made by Peoples Banking and Trust Company.

The grant of about $368,000 will enable Peoples Bank to offer mortgages at the reduced rate of 5.25 percent, said Doug Stanley, director of housing and community development for Tri-County Community Action, the agency that won the grant and is administering the construction project.

Community Action also is applying for a grant from the Ohio Department of Development's Non-Profit Housing Development program, which the agency hopes will provide "gap" financing - a direct subsidy to Community Action - to lower the cost of the houses.

The homes will be sold to buyers with incomes from 45 to 65 percent of the median in Athens County who are considered credit-worthy.

According to 1993 statistics from the Ohio Department of Development, about 2500 households in Athens County with incomes from about $10,750 to $15,500 meet the income requirement. Joe Yazombek, executive vice president of Peoples Bank, said applicants will be selected on the same criteria as any other mortgage applicant, which include credit history, job stability and ability to repay the loan.

About 15 families already have expressed interest in the project, Stanley said.

The houses will be built on a vacant plot of land owned by Community Action at the end of Lexington Street. They will be adjacent to 32 units of low-income apartments.

"Each time someone moves to a better home, there's a chain reaction," which allows low-income people to move up, said Athens County Commissioner Bill Theisen. The Meadow View Project would be a step toward helping the county "absolutely eliminate" substandard housing, he said.

Community Action is awaiting approval of its grant application from the Ohio Department of Development, but it is eager for the project to continue.

"If everything goes according to plan, we could begin construction by late summer," Stanley said.

The Federal Home Loan Bank is a federally chartered bank that makes loans or advances to retail banks, which in turn give mortgages to individuals.

Ten percent of its earnings go to the Affordable Housing Program, which helps local banks lower their interest rates on mortgages to low-income people.

The Cincinnati branch of the Federal Loan Home Bank serves Ohio, Kentucky and Tennessee. Out of about 120 applicants for the Affordable Housing Program grant, about 40 were selected based on the income of the people served, the impact on the community, the cost of the housing and the involvement of non-profit agencies, said Carol Peterson, senior vice president and director of housing and community investment of the FHLB.

"This was a very competitive application," Peterson said. Community Action's application was helped by the reputation of that agency and of Peoples Bank.

"We think they do good work," Peterson said of Peoples Bank.

The houses will fill a need, said those involved in the project.

"There's certainly a shortage of affordable housing throughout the county," Stanley said. "(The project is) positive for the village of Chauncey."