The Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) has issued a blistering audit of how the U.S. Department of the Treasury has handled the $7.6 billion Housing Finance Agency Innovation Fund for the Hardest Hit Housing Markets, more commonly known as the Hardest Hit Fund (HHF). In its report, SIGTARP states that the fund has badly missed its goals and was operated in a disorganized manner.
‘As of Dec. 31, 2011 … the HHF has spent only $217.4 million to provide assistance to 30,640 homeowners – approximately 3 percent of the TARP fund allocated to HHF and approximately 7 percent of the minimum number of homeowners whom the state housing finance agencies estimate helping over the life of the program, which ends in 2017,’ says SIGTARP.
SIGTARP also accuses the Treasury of inconsistent criteria in choosing which states would receive HHF money.
‘It is unclear why Treasury determined that states with high percentages of their population in counties with an unemployment rate greater than 12 percent were economically distressed, but that states with 11 percent unemployment were not,’ the audit says. ‘The cutoff for Treasury's selection of states in round two [of funding] was not transparent because one percentage point divided Ohio (with 22 percent of its population living in counties with a greater than 12 percent unemployment rate), which was selected, versus Tennessee (with 21 percent), which was not selected until five months later, when Treasury made another round of funding to all states with above-average unemployment. For the fourth round, no new states were selected. Rather, Treasury nearly doubled the funds four days before the expiration of Treasury's TARP investment authority.’
SIGTARP adds that the Treasury ‘has not set measurable goals and metrics’ to enable congressional or public measurement of the HHF's progress, and it charges that a lack of ‘comprehensive planning’ – including a failure to provide states with advance notice of the program's rollout – contributed to delays in implementing assistance to homeowners.
The full report is available online.