A federal-state program aimed at helping homeowners in states hardest hit by the mortgage crisis is falling far short of its goals, a federal watchdog said in a report released Thursday.
In the report, the Special Inspector General for the Troubled Asset Relief Program (TARP) said that just 3% of $7.6 billion available in the Hardest Hit Housing Markets program — available for 18 states and the District of Columbia — had been tapped as of Dec. 31.
The money has gone to help 30,640 homeowners, or about 7% of the 458,000 homeowners officials estimated would be helped by the end of the program in 2017, according to the watchdog.
More than 75% of the program funds has gone to prop up state unemployment programs that pay mortgages of the unemployed — not efforts such as mortgage modifications or principal reductions that would force banks to take a hit, according to the report.
Christy Romero, the Special Inspector General for the Troubled Asset Relief Program, said the hardest hit fund has largely served to help the unemployed.
“It was supposed to be an innovative program intended to reach the unemployed and underwater homes,” Romero said in an interview with CNNMoney. “It is important to reach the unemployed, but it’s not reaching underwater homes like it was intended.”
Signing TARP into law was one of Bush’s last acts in office. But it’s been Obama’s to run—into the ground.
Other larger TARP-funded housing programs, including the Home Affordable Modification Program, have weathered criticism, especially from the special inspector general, for falling short in its goal of easing the national foreclosure crisis.
This new watchdog report focused on a different, smaller program, the Hardest Hit Housing Markets program. The hardest hit program was targeted to states with the largest numbers of homeowners drowning in negative equity and unemployment.
The money was supposed to give state housing officials incentives to come up with new and different ways to address the housing crisis in their states. But most states just used the money for programs that pay the mortgages, insurance and property taxes of the unemployed.
Rather than try to do anything structural to put homeowners on their feet again, the money is just being used to pay their bills. It’s just another welfare program, a transfer of wealth. Give people money, with no expectations, no plan, just a blank check. Nothing gets better, the market continues to slump—it’s almost like it’s by design.
Heckuva job, Bambi.