Senator calls for more scrutiny of Florida’s program to help homeowners avert foreclosure

Asks special inspector general to examine recent disclosures about the mortgage assistance program in broader federal audit

TALLAHASSEE – March 28, 2013 – (RealEstateRama) — Florida’s senior U.S. senator has called on President Obama’s special inspector general to investigate mismanagement and inaction by Florida officials administering the state’s $1 billion share of federal mortgage assistance money, as disclosed in a recent newspaper account.

Basically, the money is meant to go to unemployed home¬owners or those who have jobs but don’t earn enough to pay their mortgage. But, according to an examination by The Tampa Bay Times, the state’s Hardest Hit Fund hasn’t helped enough financially strapped homeowners, while it has given some of the taxpayer assistance money out to fraudsters, tax scofflaws and even a sex offender banned from federally assisted housing.

The Times also found that just 18 percent of Floridians who applied for monthly Hardest Hit mortgage assistance have received it — the lowest percentage of any of the 18 states eligible to participate in the program. Meantime, Florida has posted the nation’s highest state foreclosure rate for the sixth consecutive month in February, according to RealtyTrac’s Foreclosure Market Report last month.

In addition to the newspaper’s findings, a recent report by the U.S. Treasury Department shows the Florida Housing Finance Corporation has distributed just 15.7 percent of the state’s $1 billion share of Hardest Hit money since 2010.

“More than three years have passed since Congress created this program and only about 16 percent of the money available to Floridians has actually reached mortgage-troubled homeowners,” Nelson wrote in a letter, dated March 21, to Christy L. Romero, the special inspector general for the country’s Troubled Assets Relief Program (TARP).

Romero is the federal government’s watchdog over such things as banks use of bailout money and the states handling of stimulus funds, including the Hardest Hit Fund. She’s currently conducting a broader audit of the mortgage assistance program, which Nelson wants to now fully address the questions raised about Florida. A previous audit of the overall program faulted the Treasury Department for mismanaging the roll out and for leaving the states to implement the program on their own.

In his letter to Romero, Nelson asked that she examine information about Florida published in the Times on March 10. Specifically, the newspaper reported:

• The office of Gov. Rick Scott — a sharp critic of federal stimulus programs — restricted efforts to publicize the Hardest Hit Fund and was instrumental in cutting aid amounts when the program went statewide in 2011.

• 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.

• The state agency running the program ignored its own guidelines and approved aid to dozens of homeowners with histories of financial mismanagement including previous foreclosures, IRS liens and bankruptcies predating the housing bust.

• At least 15 people in Tampa Bay alone got Hardest Hit assistance despite felony records for fraud, grand theft, drug possession and other serious offenses.

In contrast to Florida, the smaller state of Michigan already has disbursed 75 percent of its Hardest Hit funds and helped thousands more homeowners than Florida.

The Hardest Hit Fund is a small part of the federal government’s TARP, which pumped $700 billion into banks and housing markets to keep them from collapsing. Some $7.6 billion was made available via the Hardest Hit Fund to 18 states and the District of Columbia. Each received an allotment based upon unemployment rate, home-price declines and concentrations of people living in economically distressed areas. Florida was deemed eligible for slightly more than $1 billion, the second highest amount for any state.

When the state received Hardest Hit money it created a pilot program in Lee County. But it was slow to take the program statewide, doing so only after Nelson and others publicly questioned the delay. “It has come to my attention that the Hardest Hit Fund program in Florida is being delayed to the detriment of needy homeowners,” Nelson wrote in a 2011 letter to state housing officials.