The federally-funded Hardest Hit Fund provided $7.6 billion to 18 states and the District of Columbia three years ago to help struggling homeowners avoid foreclosure, many of them unemployed or facing other hardships.
But only 25 percent of the money has been allocated to the state Housing Finance Agencies (HFAs) responsible for helping these families, with the assistance of lenders and investors. And only 16 percent of the $7.6 billion has been distributed. The program ends in 2017.
U.S. Treasury administrators of the fund said they are working to “identify best practices, share lessons learned between states and provide additional assistance and oversight to struggling HFAs,” according to a just-released update on the program by the Treasury.
In February, Treasury continued to participate in bi-weekly conference calls with the 19 HFAs and the large servicers participating in the Hardest Hit Fund to discuss more effective methods of reaching struggling homeowners, and new ways to expand program eligibility.
These HFA areas were chosen because they have experienced steep home price declines or severe unemployment in the economic downturn. The states are experimenting with a number of different programs to help homeowners, including principal reduction, reinstatement, short sale/transition assistance, modification assistance, loan purchase, and mortgage payment programs, the Treasury’s report said.
A watchdog report one year ago cited the Hardest Hit Fund’s poor organization and the lack of securing early participation from the largest mortgage servicers as the biggest factors for the program’s poor performance. That report came from the Special Inspector General for the Troubled Asset Relief Program (TARP).
TARP is the primary U.S. bailout program approved by Congress at the height of the financial crisis, part of which has been diverted to fund foreclosure prevention programs.
“There are a number of states where we are still seeing homeowners really reluctant to reach out for help,” Andrea Risotto, Treasury spokeswoman told USA Today.
Many homeowners who applied early were rejected on eligibility requirements, she said. However, individual states have revised their eligibility to include a broader range of people.
Many who were rejected could qualify if they applied again, she said.
Nationally, more than 100,000 homeowners were helped with $1.1 billion in direct assistance since the program began, Risotto said. About $1.7 billion out of the $7.6 billion has been committed or budgeted to homeowners for future payments.
California, with the highest allocation of almost $2 billion, has helped more than 22,000 borrowers. North Carolina, Michigan, Ohio and Florida follow.