A $7.6 billion Treasury Department program aimed at helping struggling homeowners isn’t just falling dramatically short of its original goals, according to a new audit. The Treasury Department officials in charge of the program are also going out of their way to make it harder to measure the program’s failures, approving states’ efforts to move the goalposts for the so-called Hardest Hit Fund (HHF) despite having been warned about the importance of consistent goals by previous audit reports.
The HHF program is part of the Toxic Asset Relief Program (TARP), which is the technical title of the massive financial bailout fund requested by the Bush administration and passed by Congress in late 2008. The idea behind HHF was to target the worst-off mortgage borrowers using creative approaches to keep them in their homes. In the context of the $700 billion TARP fund that was primarily targeted at rescuing investors from themselves, the HHF was a specialized tool that promised to commit public resources to rescuing the little guy as well.
The Special Inspector General for TARP (SIGTARP) produces regular audits of various TARP functions and programs, and on Tuesday it released its latest look at HHF. The program was supposed to spend nearly $8 billion in 18 states and the District of Columbia, with funds bringing aid to as many as 546,562 homeowners across those 19 separate relief plans.
Instead, HHF has spent just $1.7 billion and aided 126,858 homeowners — 22 percent and 27 percent of the initial goals for spending and program reach.
Treasury Department spokesman Timothy Massad defended the HHF program to the Wall Street Journal in part by saying that demand for the type of assistance the program provides has declined since those initial projections were crafted. But the SIGTARP report specifically criticizes Treasury officials for approving frequent shifts in goals for spending and homeowners reached through the fund, saying the department ignored previous SIGTARP warnings that “a shifting baseline…makes it difficult to measure performance against expectations.” As a result, “Treasury is refusing to hold itself or the states accountable to any goal of the number of homeowners to be assisted” by the program.
Vastly underperforming on sky-high initial estimates is a common problem for Obama administration programs meant to aid homeowners. Another TARP program for homeowners was supposed to spend $46 billion on mortgage relief, but after three years it had barely managed to distribute one tenth of that amount. The National Mortgage Settlement rolled out in early 2012 has proved a bust, failing to stop mortgage servicer abuses or deliver meaningful relief to underwater borrowers. The Home Affordable Modification Program (HAMP) didn’t just fall short of reaching even a quarter of the 4 million borrowers it was supposed to help, it also failed those it did manage to reach. Half of the loans modified under HAMP have slid back into default. Similar problems have plagued the administration’s enforcement efforts relating to the financial crisis, with Attorney General Eric Holder exaggerating his department’s prosecutorial accomplishments by a factor of five.
Meanwhile, in the five years since they brought the entire economy to its knees, banks have made a rapid comeback and are once again posting record profits.