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Report: Treasury Snubs Struggling Homeowners

Important TARP funds targeted for homeowners have not been released

- Common Dreams staff

Only 3 percent of the $7.6 billion in TARP funds that are targeted for troubled homeowners facing foreclosure have been spent, according to a report by the Office of the Special Inspector General for the Troubled Asset Relief Fund.

A house that was foreclosed by a bank, is for sale in California. (Photo: Michael Goulding, The Orange County Register) The Hardest Hit Fund was created in 2010 to help struggling homeowners, but the Treasury Department has failed to distribute the vast majority of the money in the last two years due to "a lack of comprehensive planning," the report said.

"Look at the TARP money that goes out to the banks," said Special Inspector General Christy Romero in an interview with The Huffington Post. "That goes out in a matter of days. This has been two years and only 3 percent of these funds have trickled out to homeowners."

Chris Hayes, a host at MSNBC, said in a Tweet responding to the report, that the White House's "foreclosure mitigation failure has been so egregious and cruel, it makes me question their motives on everything."

The report is available here.

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NY Times: Treasury Faulted in Effort to Relieve Homeowners

A fund to support homeowners in the communities hit hardest by the collapse of the housing bubble has disbursed just 3 percent of its budget and aided only 30,640 homeowners in the two years since its creation, according to a report released on Thursday by a federal watchdog office.

The Hardest Hit Fund, which was created in the spring of 2010, grants money to state housing finance agencies for efforts to help families that are facing foreclosure. It has “experienced significant delay” because of “a lack of comprehensive planning” by the Treasury Department and limited participation by Fannie Mae, Freddie Mac and the large mortgage servicers, said the report by the special inspector general for the Troubled Asset Relief Program.

“TARP wasn’t supposed to be just a bank bailout,” said Christy L. Romero, the special inspector general for TARP, in an interview. “It was specifically designed with the goal of helping homeowners, and our concern is that that goal may not be met.”

As of the end of 2011, the Hardest Hit Fund had spent $217.4 million out of its $7.6 billion budget, the report found. The program is intended to reach homeowners who are unemployed, or living in areas with high unemployment rates or steeply falling home values.

The report is just the latest to criticize the Obama administration’s efforts to relieve homeowners battered by the nationwide drop in housing prices and the broader recession. The office of the special inspector general has repeatedly criticized Treasury’s management of the Home Affordable Modification Program, Washington’s main initiative to prevent foreclosures.

The Treasury Department had estimated that the program would reach three million to four million homeowners. It has aided fewer than a million, though the program has been completing more and more permanent modifications recently.

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Huffington Post: TARP Bailout Money Fails To Reach Neediest Homeowners After Two Years: Report

The Hardest Hit Fund, a $7.6 billion initiative established by the federal government in February 2010 to help families in states most crippled by the collapsed housing market, has distributed just 3 percent of its money -- or $217.4 million -- to help homeowners, according to a report released Thursday by the Office of the Special Inspector General for the Troubled Asset Relief Fund, or SIGTARP.

"Look at the TARP money that goes out to the banks," said Special Inspector General Christy Romero in an interview with The Huffington Post. "That goes out in a matter of days. This has been two years and only 3 percent of these funds have trickled out to homeowners."

The Hardest Hit Fund has helped just slightly more than 30,000 homeowners, or 7 percent of the roughly 480,000 homeowners targeted for assistance by the end of 2017 when the program expires, according to the report. The program is funded by TARP, the 2008 legislation that has provided a $600 billion to bail out various banks and other companies in the wake of the nation's financial crisis.

"The Hardest Hit Fund is really struggling to get off the ground and it's a real concern about whether this money can get out to these homeowners," Romero said.

The 76-page report reads like the autopsy of a dead housing program, placing the blame for the program's paltry performance squarely on the Treasury Department, the government agency responsible for TARP and, in turn, the Hardest Hit program.

According to the report, Treasury initially dragged its heels in getting the largest mortgage servicers to participate in the initiative, instead relying on the individual states to broker arrangements with the servicers. Some of the states lacked the necessary clout to secure servicer participation, thus limiting the program's ability to reach needy homeowners, concluded the report.

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