Audit: State not helping homeowners enough with their mortgages

A foreclosed home on Southwest 190th Place in Homestead.
A foreclosed home on Southwest 190th Place in Homestead. MIAMI HERALD STAFF

A long-criticized billion dollar program meant to keep homeowners from losing their homes is still being mismanaged in Florida, according to a federal audit that will be released Tuesday.

The Hardest Hit Fund was established by Congress in 2010 to provide mortgage relief and other assistance to struggling homeowners as part of a wider effort to bail out the nation’s economy. The program is jointly managed in Florida by the U.S. Treasury Department and the Florida Housing Finance Corporation, a state agency.

Florida was one of the states hit hardest by the foreclosure crisis. It has received more than $1 billion of the $7.6 billion disbursed nationwide. But Florida’s performance has lagged well behind other states because of a lack of federal oversight, according to an audit performed by the Special Inspector General for the Troubled Asset Relief Program, which serves as a watchdog for the bailout.

The audit found that Florida accepted only 20 percent of homeowners who applied for assistance, the lowest rate among the 18 states that received funding. (The District of Columbia is also part of the program). The national acceptance rate was 48 percent.

It also found that a six-month waiting period to receive assistance contributed to 40 percent of Florida homeowners ultimately withdrawing their applications, the highest withdrawal rate in the country.

The audit recommended that the Treasury Department set strict standards and benchmarks for the state, which it has so far failed to do.

“Florida homeowners do not have the same chance of getting foreclosure assistance from [the] Hardest Hit Fund compared to homeowners in other states, and that is not good enough for an emergency crisis program,” Christy Goldsmith Romero, the special inspector general, said in a statement.

The audit was launched in 2013 after criticism from U.S. Senator Bill Nelson, D-Florida, and other state leaders. A previous audit in 2012 that criticized Florida’s strict eligibility rules led to promises from the state housing agency that it would improve the program.

Cecka Green, a spokeswoman for the agency, disputed the audit’s findings, saying it displayed “a fundamental misunderstanding of the HFF program in its totality” and did not take into account recent reforms.

Green added that Florida has given out more than $411 million to homeowners battling foreclosure and other problems over the last two years, after spending only $110 million during the program’s first three years.

In a letter to auditors, a Treasury Department official agreed that Florida had significantly improved its performance since 2013 and said that the audit had found no evidence of waste, fraud or abuse.

“Florida has been at the vanguard of [the program] in many ways,” wrote Mark McArdle, the Treasury official. McArdle pointed to the state offering assistance to senior homeowners struggling with reverse mortgages, underwater homeowners and first-time homebuyers as examples of innovation.

The fund primarily offers one-time payments to homeowners who’ve fallen behind on their mortgage bills, and monthly mortgage payments for homeowners who’ve lost their jobs or suffered other financial hardships.

McArdle also said that states are allowed to manage the program as they see fit. Acting on the audit’s suggestion to set mandatory approval and denial rates for Florida, he said, would “run counter” to the program’s design.