Nelson asks feds to look into state’s management of Hardest Hit fund

WASHINGTON, D.C. – January 22, 2015 – (RealEstateRama) — U.S. Sen. Bill Nelson (D-FL) today asked the federal government to look into Florida’s handling of the $1 billion Hardest Hit mortgage assistance program, and provide guidance as needed.

Nelson made the request in a letter sent today to Treasury Secretary Jack Lew. His request comes on the heels of a recent report by the Tampa Bay Times finding that tens of thousands of Florida homeowners seeking assistance through the program are still waiting for help.

“In light of this report, and what appears to be continued mismanagement of this program, I’m asking that you take a deeper look into whether the state is doing everything it can to meet the needs of all Floridians eligible to receive this assistance, and offer guidance as needed,” Nelson wrote.

The Treasury Department created the Hardest Hit program in 2010, at the height of the recession, to help those facing foreclosure keep their homes. But, as the Times reported Friday, nearly half of the more than $1 billion the federal government made available to help Florida homeowners remains unspent. And if the state fails to distribute the money by the end of 2017, those funds will no longer be available to help homeowners.

Nelson requested an initial probe of the program in 2013 after the Tampa Bay Times reported that state officials “made a series of missteps and questionable decisions that may have cost families their homes.” In response, a federal inspector general agreed to audit the program and found that Florida had the lowest approval rate of any participating state, at just 20 percent.

The inspector general went on to make a number of recommendations to improve the program but, as the Times reported last week, problems persist. So Nelson is asking the Treasury Department to take a more active role in Florida’s management of the program, and ensure it works for those who need help the most.

Following is the text of Nelson’s letter to the Treasury Secretary, and a background article from the Tampa Bay Times:

January 21, 2016

The Honorable Jacob J. Lew
Secretary of the Treasury
United States Department of the Treasury
1500 Pennsylvania Avenue, NW
Washington, DC 20220

Dear Secretary Lew,

In March 2013, I asked the Special Inspector General for the Troubled Asset Relief Program to investigate Florida’s management of the Hardest Hit Fund, a federally funded program set up to help struggling homeowners avoid foreclosure. I made that request after a Tampa Bay Times report found that, in the program’s first three years, the state had spent less than 10 percent of the more than $1 billion the federal government set aside for Florida homeowners.

The Times also reported that “the office of Gov. Rick Scott—a sharp critic of federal stimulus programs—restricted efforts to publicize the Hardest Hit program and was instrumental in cutting aid amounts when the program went statewide in 2011.” The paper also found that “the vast majority of Florida’s 557,000 condo owners were ineligible for Hardest Hit aid for more than a year because of an arbitrary policy that was later reversed.” And it reported that “at least 15 people in Tampa Bay alone got Hard Hit assistance despite felony records for fraud, grand theft, drug possession and other serious offenses.”

In response to my request, the Inspector General agreed to audit Florida’s management of the program and found that Florida had the lowest approval rate of any participating state, approving just 20 percent of applicants compared to the 48 percent average for all other states.

The Inspector General went on to make a number of recommendations to improve the program. Yet, despite those recommendations, the Tampa Bay Times reported this weekend that tens of thousands of eligible homeowners seeking assistance through the program are still waiting for help.

According to the Tampa Bay Times, “After five years, only 24,000 of the 116,000 who applied for Hardest Hit help have received it. Almost half of the state’s $1 billion remains unspent.”

The paper went on to report that “the federal official who oversees Treasury’s management of the Hardest Hit Fund says Florida should put more effort into helping people stay in homes they already have.”

In light of this report, and what appears to be continued mismanagement of this program, I’m asking that you take a deeper look into whether the state is doing everything it can to meet the needs of all Floridians eligible to receive this assistance, and offer guidance as needed.

Any continued problems in administering this program only delays financial help to those who need it the most. Therefore, I would appreciate hearing back from you by Feb 1.

Sincerely,
Nelson signature

Tampa Bay Times logo

Florida’s Hardest Hit funds finding way to ‘first-time homebuyers’ who really aren’t

By Susan Taylor Martin
Published: Jan. 15, 2016

When Robin Robbins and her son bought a house in Plant City last fall, $15,000 of their down payment and closing costs came from a federally funded program for first-time home buyers.

But the house is not the first one Robbins has owned. Records show she has had two others. And her situation is not unique — at least five other Hillsborough County residents who previously owned homes have received up to $15,000 in help from the Florida Hardest Hit Fund Down Payment Assistance Program.

Created in 2010 after the housing crash, the $7.6 billion Hardest Hit Fund was mainly intended to help homeowners in Florida and 17 other states avoid foreclosure. Florida’s foreclosure rate remains the nation’s second highest. But $50 million in Hardest Hit money is now being used to help people in five counties — Hillsborough, Brevard, Orange, Duval and Volusia — buy houses.

What’s more, they can get the down payment assistance even if they are not really first-time buyers. That’s because the federal definition of “first-time” is anyone who has not owned and occupied a home in the past three years.

It’s enough to baffle and frustrate current homeowners like Charles Kleber of Spring Hill. He has been waiting since August for Hardest Hit help to bring his mortgage up to date so he can stay in his home of more than 30 years.

“You give the guy down the block money to buy a house and then this one has to go into foreclosure,” says Kleber, 77. “It makes no sense.”

Florida’s Housing Finance Corp., which runs the state’s Hardest Hit programs, says the purpose of the down payment assistance is to bolster the real estate market in areas slammed by the foreclosure crisis.

When the Hardest Hit Fund started, “the focus needed to be on homeowners in some type of mortgage distress,” said spokesperson Cecka Green.

Now that the market has picked up, she said, helping people buy homes will “strengthen demand in (hard-hit) areas, stabilize housing prices and prevent future foreclosures.”

It is true that the housing market generally has improved. But many Florida homeowners are still struggling. After five years, only 24,000 of the 116,000 who applied for Hardest Hit help have received it. Almost half of the state’s $1 billion remains unspent. And any money not used by December 2017 — less than two years away — must be returned to the U.S. Treasury Department.

The federal official who oversees Treasury’s management of the Hardest Hit Fund says Florida should put more effort into helping people stay in homes they already have.

“States, particularly Florida, have not done a good job of getting this money out to homeowners and rather than do a better job on existing programs … they create other programs to spend on someone else,” said Christy Romero, special inspector general for the Troubled Asset Relief Program. (TARP is the federal bailout program.)

In July, the state housing agency began the down payment assistance in Hillsborough and the other four counties. Compared to the sluggish rate at which Florida has helped existing homeowners, the first-time buyers program has moved with surprising speed. So far, 758 people have received help with down payments and closing costs.

Among Hillsborough 174 “first-time” buyers:

• A 43-year-old woman who received $15,000 in assistance in October on a four-bedroom, three-bathroom home in Brandon. In 2010, a year after declaring bankruptcy, she and her ex-husband lost another home in Brandon to foreclosure.

• A 59-year-old woman who received $7,500 toward the down payment and closing costs on a house in Tampa in August. In 2012, a bank foreclosed on a home she and her late husband owned in Seffner.

• A 29-year-old woman who received $15,000 in assistance in September for a house near Busch Gardens. She lost her first house to foreclosure in 2008, just a year after buying it.

Records show that Robbins, the Plant City woman, had two previous homes. One was a condo that she quit claimed in 2009 to a community association that sued her for unpaid dues. The other was a house in Tampa that she and her ex-husband lost to foreclosure.

In September, she and her son, Ian, received $15,000 in assistance on a newly built four-bedroom house in Brandon costing $205,490.

Robin Robbins, who has had three bankruptcies, “couldn’t qualify on her own for anything other than a small house so we decided to combine our incomes and get a nice place,” said her son, a security guard. He said they disclosed the previous homes but were told by their Realtor and loan originator that they qualified as “first-time” buyers because Robbins hadn’t owned and occupied a home within the past three years.

If a goal of the down payment program is to “prevent future foreclosures,” as Green said, does it make sense to help people with histories of foreclosure and bankruptcy buy homes? Green did not answer directly but noted that the assistance is contingent on a lender deeming a person “mortgage worthy.”

The Treasury Department has given Florida and other states considerable latitude in devising ways to use their Hardest Hit money. But Romero, the special inspector general for the Troubled Asset Relief Program, said states must be able to show that down payment programs really do reduce foreclosure rates.

“If they say they can help prevent future foreclosures by increasing and stabilizing housing prices, they have to set some performance standards to measure that,” she said.

Romero’s greatest concern, though, is that Florida still is not moving fast enough with those programs that do help current homeowners.

“Why can’t anybody get in? Why is it taking so long?” she asked. “Maybe the requirements and paperwork are so tight that the money is not getting into the hands of where it needs to go. You’ve got to change immediately, but I’m not confident that’s going to happen.”

Nor is Kleber, the Spring Hill homeowner who has been trying to get Hardest Hit help for months to bring his delinquent mortgage current.

“I’ve gone through every hoop, every scenario that they could possibly come up with asking me for this information, that information all over again,” he said. “It’s just a big runaround.”

A retired database manager, Kleber said he thought he “had it made” until his wife died and he lost most of his saving in the 2008 stock market crash. Without his wife’s Social Security income, he fell behind on the mortgage payments.

“I’ve tried to keep it going,” said Kleber, who drives school buses part-time, “and my daughter said she’ll help as much as she can. We are managing to keep the lights on and the taxes paid.”

Kleber said a housing counselor recently told him he might be eligible for a loan modification. But it irks him that people who have already lost a home to foreclosure are getting up to $15,000 in Hardest Hit assistance to buy another one when he needs just a few thousand dollars to stay in his house of three decades.

“It’s not as if I was asking for $100,000 or $50,000. All I want is to pay the arrears (to the bank) so I can get them off my back.”