A multi-billion-dollar homeowner help program lacks accountability, transparency and measurable goals, according to a federal report to Congress that assesses the use of taxpayer money to prevent foreclosure.
It’s the second time the special inspector general of the Troubled Asset Relief Program, or TARP, has alerted to concerns with the $7.6 billion Hardest Hit Fund, which was doled out to 18 states and the District of Columbia beginning in 2010. Florida received $1.06 billion.
In a nearly 400-page review of TARP released last week, the inspector general complains that the Treasury Department rejected recommendations to set performance goals for Hardest Hit, including how many homeowners should be helped, and publish progress toward that goal on its website and in a housing scorecard released monthly.
“In other words, rather than fix the problem that the inspector general warned Treasury about, Treasury allowed the problem to get worse,” the report says. “Treasury is refusing to hold itself or the states accountable to any goal of the number of homeowners to be assisted by the Hardest Hit Fund, and the result has been that the program is reaching far fewer homeowners than the states expected in 2011.”
Nationwide, it is estimated that 367,290 homeowners will receive Hardest Hit money, a 33 percent reduction from 2011 estimates.
The Treasury Department says it doesn’t make sense to set static measures for the Hardest Hit Fund because programs, which are developed by the states, have to be able to evolve in response to what’s happening in the housing market.
It holds states accountable by tracking their progress on money disbursement and homeowner participation.
Last year, Treasury sent the Florida Housing Finance Corp. a letter with concerns that the state wasn’t doing enough to get money to borrowers. Florida had just two disbursement programs at the time for unemployed and underemployed homeowners. The Treasury threatened “remedial actions” if the program wasn’t improved.
“It is urgent that Florida Housing take steps now to increase volume while the need is critical,” the letter said.
It also noted that Florida had no program to address underwater mortgages and long-term affordability.
In September, Florida rolled out a principal reduction plan for an estimated 10,000 homeowners who are current on their mortgage payments but owe more on their loan than their home value.
“There is more than one way to measure performance,” said Mark McArdle, chief home ownership preservation officer for the Treasury Department. “We are holding states accountable, and we do have goals for them, we just define accountability differently.”
The Treasury also debuted in October an online quarterly performance summary for the Hardest Hit Fund that tracks each state’s progress. The summary showed that the amount disbursed increased by 222 percent over the last year, and the number of homeowners assisted increased by 117 percent over the same period.
Although states have until 2017 to spend the Hardest Hit money, struggling borrowers are usually working on much shorter timelines to save their homes.
Linda Maslowski, a New Port Richey resident, complained to Florida Attorney General Pam Bondi in September about the Hardest Hit program after she said her February application was repeatedly delayed and documents lost.
“After six months of being told I would be helped and endless piles of paperwork, I feel I was just strung along,” Maslowski said.
Maslowski said her application was eventually rejected. She complained to U.S. Sen. Bill Nelson, D-Fla., and, to her surprise, the rejection was reversed and her application approved.
“They turned around and said ‘Oops, that was an error, she qualifies,’ ” Maslowski said when reached this week. “I was within weeks of losing my home.”
The inspector general’s report notes that after nearly three and a half years, just 22 percent of the Hardest Hit funds have been spent nationally as of June 30 on homeowners. Florida had disbursed 13 percent.
As of Sept. 1, the number of Florida homeowners helped by the Hardest Hit program was 11,414, more than double the amount helped through June 2012.
Money to Florida homeowners stands at about $337 million in direct payments or amounts for future payments to approved homeowners.
“We’ve tried to work as diligently as we can to get programs implemented,” said Cecka Green, spokeswoman for the Florida Housing Finance Corp., which oversees the state’s Hardest Hit program.
Green estimates 39,000 Florida borrowers will get help from Hardest Hit money. The Treasury’s 2012 letter notes the original minimum estimate was 45,000.
What is Hardest Hit?
The Obama Administration awarded $7.6 billion beginning in 2010 to states that suffered the most from the real estate crash. Florida received $1.06 billion and must spend the money on foreclosure prevention programs by 2017 or risk losing it. Florida’s Hardest Hit program is overseen by the Florida Housing Finance Corp.