A special program created by the Obama administration to help homeowners hit hardest by the mortgage crisis has aided only a small fraction of those eligible.

 

The two-year-old Hardest Hit Fund, managed by the Department of the Treasury through the states, has assisted only 30,640 mortgage holders—out of the three to four million it promised to help, according to a report by the special inspector general for the Troubled Asset Relief Program.

 

The fund, which was meant to primarily help unemployed homeowners, continues to sit on most of its multi-billion-dollar budget. Out of the $7.6 billion available, officials had spent about $217 million, or 3% by the end of 2011. Three-fourths of the funds that have been distributed have gone to unemployment assistance. Another 20% has been used to pay past due amounts and 5% to reduce the principal of mortgages.

 

“A lack of comprehensive planning” by Treasury officials was partly to blame for the program’s ineffectiveness, wrote the special IG. Contributing to the problem was limited participation by Fannie Mae, Freddie Mac and large mortgage servicers. The 18 states involved in the program do not have the power to pressure the big banks and the Treasury Department, which does, has chosen not to do so.

-Noel Brinkerhoff, David Wallechinsky

 

Treasury Faulted in Effort to Relieve Homeowners (by Annie Lowrey, New York Times)

TARP Bailout Money Fails To Reach Neediest Homeowners After Two Years: Report (by Loren Berlin, Huffington Post)

Only 3% of $7.6B ‘Hardest Hit Fund’ has Helped Borrowers: Watchdog (eCreditDaily)

Factors Affecting Implementation of the Hardest Hit Fund Program (Special Inspector General for the Troubled Asset Relief Program) (pdf)