Report: Federal program is not meeting goals
A new report from a federal watchdog has found that a federal program aimed at helping homeowners in Georgia and other high-foreclosure states is not on target to meet its goals. The Department of Treasury is defending the program, however, stating that states are using the funds to help people who are struggling financially, thereby fulfilling its overall goal.
The Hardest Hit Housing Markets Program was created as part of TARP during the 2008 economic meltdown. The goal was to help homeowners in 18 states and the District of Columbia avoid repossession and foreclosure by giving incentives to state housing officials to find new ways to address housing issues in their states. Common efforts included mortgage modifications or principal loan reductions.
But because those programs could require mortgage lenders to take a hit, banks have been slow to participate. As a result, states have been forced to divert the funds into other programs, namely those that pay the mortgages and related expenses of the unemployed.
According to the report from the Special Inspector General for the Troubled Asset Relief Program (TARP), only about 3 percent of the $7.6 billion available in the Hardest Hit Housing Markets Program had been spent. Further, only about 7 percent of the homeowners that officials estimated would be helped by the program by 2017 have actually seen any benefit.
In response to the report, the Department of Treasury defended the program, saying that it makes sense to give more control to the states. This is because state governments are more aware of the unique issues and needs of their residents and better able to give out the hardest fit funds in a way that will best help the state as a whole.
Source: CNN Money, “Watchdog blasts housing program for ‘hardest hit’,” Jennifer Liberto, April 12, 2012