Federal money slow to get to homeowners

A $7.6 billion federal program to help homeowners avoid foreclosure in 18 states and the District of Columbia has gotten just 22% of its funds to homeowners more than three years after its launch, a government report out Tuesday says.

The report criticizes the Treasury Department, which oversees the Hardest Hit fund, for failing to set measurable goals for the program and for letting states reduce their projections. That shifting baseline makes it hard to track performance, the report says.

After being announced near the height of the foreclosure crisis, estimates were that the program would help almost 550,000 people. Those are now closer to 370,000, says the report from the Office of the Special Inspector General for the Troubled Asset Relief Program.

"They just keep lowering the bar," says Christy Romero, special inspector general. States continue to struggle and "Treasury hasn't gotten in there to figure out what's wrong," she says.

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Not so, Treasury says. It's worked with the states to launch 60 Hardest Hit programs, including recent ones to use funds to battle blight from vacant homes. In the year ended in June, the number of homeowners who'd been helped by the program had more than doubled from the year before, it says

"We are seeing a much faster ramp up," says Treasury's Assistant Secretary Timothy Massad, adding that it took time for the states to build up their unique programs.

Through June, almost 127,000 homeowners had gotten help, mostly with funds to help pay mortgages while riding out periods of unemployment or underemployment.

While the housing market has started to recover, with prices up sharply the past year, more work remains, Massad says.

The special inspector general report notes that 14 of the 19 Hardest Hit recipients have reduced their estimates of how many people their programs will help. Six of the states have reduced estimates by more than 50%. Michigan, for instanc! e, has cut estimates by by 77%, Romero says.

The estimates may not reflect reality, says Mary Townley, of Michigan's hardest hit program. It has already helped more than 12,700 people vs. its latest estimate of 11,500, she says.

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Treasury's Massad also says estimates as to the number of people to be helped has changed as the housing market has recovered.

California, with almost $2 billion, got the biggest allocation of any state. As of June 30, it had sent out 19% of its allocation to homeowners, the report says.

"We thought this money would fly out the door. That hasn't happened," says Evan Gerberding, spokeswoman for Keep Your Home California.

Part of the reason is that homeowners, despite outreach, don't know that help exists, she says. More program changes are also coming, she says.

California set aside $772 million of its funds to pay down what homeowners owe on mortgages. So far, only 1,700 homeowners have been helped by that program, the report says.