SIGTARP REPORT: Factors Impacting the Effectiveness of Hardest Hit Fund Florida

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SIGTARP REPORT: Factors Impacting the Effectiveness of Hardest Hit Fund Florida

SIGTARP REPORT: Factors Impacting the Effectiveness of Hardest Hit Fund Florida

Summary
Five years into the Troubled Asset Relief Program’s (“TARP”) second largest foreclosure prevention program known as the Housing Finance Agency Innovation Fund for the Hardest Hit Housing Markets (“Hardest Hit Fund” or “HHF”), HHF in Florida has helped only 22,400, far less than expected at the beginning of the program. HHF Florida has drawn down only about half the $1 billion in TARP funds available.

What SIGTARP Found
SIGTARP found that Treasury abandoned its announced intent to bring strict accountability by measuring Hardest Hit Fund program effectiveness, and as a result, Treasury has allowed the Hardest Hit Fund in Florida to underperform compared to other HHF states, consistently. The Administration and Treasury announced that the Hardest Hit Fund combined flexibility for states with strict accountability by Treasury, and that program effectiveness would be measured, with effective oversight. Treasury told all 19 participating state housing finance agencies that they were required to have a tracking system to measure progress against goals. Former Treasury Home Preservation Office Chief Phyllis Caldwell told SIGTARP in 2011, that Treasury could evaluate success in HHF in ways such as, “are we reaching the right number of people, are we reaching them in a sustainable way.”
Treasury has no goals or targets to measure program effectiveness due to fear of impacting the “dynamic nature” of this TARP program, which has led to a lack of accountability and effectiveness of both Treasury and Florida’s HFA. Treasury could have set specific goals/targets tailored to HHF Florida, but did not do so. SIGTARP found that as a result, HHF Florida has not been as effective in reaching homeowners as other states. HHF Florida has the lowest homeowner admission rate of any HHF state, one of the highest withdrawn application rates, and has consistently denied homeowners at higher rates than the national average.

Treasury has no goal for the right number of people to be helped by HHF Florida, and as a result, Treasury has allowed Florida’s HFA to reduce its estimate of the number of people to be helped by HHF by 63% from 106,000 to 39,000, despite the fact that Florida had the nation’s highest foreclosure rate at 2.3% in 2014.

Treasury has no targeted homeowner admission rate for HHF Florida, and as a result, only 20% (22,400 of 109,774) of homeowners who applied for help received assistance. This is the lowest of any HHF state, and is far below the other 18 states’ average of providing assistance to about half (48%) of homeowners who apply. HHF has consistently had a low homeowner admission rate over five years (ranging from 18-23%).

Treasury has no targeted homeowner denial rate for HHF Florida, and as a result, HHF Florida has consistently denied a higher percentage of homeowners for assistance (27-45%) than the national average. This rate improved this year, but is still slightly above the national average of 26%. Treasury provides no transparency on why HHF Florida denied homeowners.

Treasury has no targeted number of homeowner applications withdrawn by Florida’s HFA, and as a result, as of March 2015, nearly 40% of all homeowners who applied to HHF Florida either withdrew their application or had their application withdrawn by Florida’s HFA. This rate has escalated from 35% in 2012, and was far higher than the other 18 states’ average of 24%, as of March 2015.

Treasury has no target for how long HHF Florida should process homeowner applications, and as a result, it takes a median of nearly 6 months (167 days) for a homeowner to get assistance.
SIGTARP found several factors contributed to HHF Florida’s slowness in getting assistance to homeowners and lack of effectiveness during the height of the crisis …

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