WASHINGTON – (RealEstateRama) — Sen. Chuck Grassley today pressed the Treasury Department for better oversight of a $9.6 billion program meant to help homeowners who suffered during the housing crisis. Amid the poor federal oversight, a Nevada state agency engaged in “widespread waste and abuse in spending” and “abused the Hardest Hit Fund with, seemingly, a sense of entitlement and no appreciation for the fact that it was taking funds for itself from the homeowners the program intended to help,” according to an audit.
“According to multiple reports released by the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), concerns were raised about waste, fraud, and abuse regarding the Hardest Hit Fund (HHF) program funding,” Grassley wrote to Treasury Secretary Jacob Lew. “I am concerned that the Treasury Department’s failure to provide proper oversight of this program has also failed vulnerable homeowners and wasted millions of taxpayer dollars.
“When the program was introduced in 2010, the Treasury Department stated that ‘HFAs [state housing finance agencies] will be required to develop and maintain operational and performance metrics, have a detailed financial reporting system and track homeowners helped through its programs.’ Even six years later, Treasury appears to be focused more on getting the HHF money out the door instead of ensuring the states are using it effectively.”
Grassley outlined a low rate of help for homeowners through the program, which has provided assistance to only 256,361 of the 601,838 homeowners in the states where the program is available who applied for assistance. Spending on administrative expenses has been a concern since the program began, he said.
The Nevada agency charged with distributing the program funds lived especially “high on the hog,” Grassley wrote. The Nevada Affordable Housing Assistance Corporation spent Hardest Hit Fund money on items including: a $500 per month car allowance for the CEO who drove a Mercedes Benz; $20,000 for a CEO’s severance package; more than $15,000 for employee bonuses, gifts, holiday parties, a manager outing at a high end cocktail bar, gift cards, and regular staff breakfasts and lunches; more than $160,000 in block-billed legal fees and costs for a private investigator, and nearly $40,000 for auditors to clean up the books; and, more than $100,000 in moving fees, excessive rent and lawyers’ fees to move to nicer office space only to break the lease to move out less than a year later.
Grassley asked a series of questions on detailed operational and performance metrics for the Hardest Hit Fund, steps to ensure that funding is used as intended, the non-profit entity in each state that distributes the funds, administrative expenses in each state, steps to validate the data each state provides to the Treasury Department, and any steps to recoup funding lost due to waste and/or mismanagement.
“I am concerned that Treasury’s failure to provide adequate oversight will allow further waste of precious taxpayer dollars,” Grassley wrote.
Grassley’s letter is available here.