ORLANDO, Florida — Florida lags behind other states in using federal mortgage assistance money to help desperate homeowners facing foreclosure, and Florida has only drawn on half of the $1 billion available, according to a critical report released Tuesday.
The report by the Special Inspector General for Troubled Asset Relief Program said only 22,400 homeowners have been helped by the Hardest Hit Fund in Florida, even though almost 110,000 homeowners have applied to the program. The U.S. Treasury Department had a goal of helping 106,000 Florida homeowners under the Hardest Hit Fund but that target has been reduced to 39,000 households when the program ends in December 2017, the report said.
Of the 19 participating states, Florida had the lowest rate of admission to the program and the highest rate of withdrawn applications. In other states, the average rate of providing assistance to homeowners who applied was almost 50 percent, compared to Florida's 20 percent rate, even though Florida had the nation's highest foreclosure rate as recently as last year, the report said.
"HHF Florida has not been as effective in reaching homeowners as other states," the report said.
The report said federal officials had been too deferential to Florida housing officials, who needed prodding to be more effective. Federal officials tried to get state officials to increase the number of homeowners getting assistance to 750 households a month, the report said, but the federal officials didn't hold state officials to that goal. Florida housing officials also weren't ready for a flood of applications in 2013 and they stopped accepting application for eight months.
The Treasury Department also lacked comprehensive planning and waited for state officials to get large mortgage servicers involved, the report said.
Rather than holding state officials and itself accountable, "Treasury conducts deferential oversight, without a sense of urgency," the Special Inspector General's report said.
The Special Inspector General recommended re-evaluating if all eligibility requirements are needed in the application process, especially for senior citizens. The inspector general also recommended bringing the acceptance rate in Florida up to that found in other states and for federal officials to require more details about why homeowners drop out of the application process.
In a response included in the report, the Treasury Department disagreed, generally, with the inspector general's findings and did not agree to implement the recommendations.
"Treasury believes it would hamper progress and slow the pace of assistance by substantially increasing the administrative burden to operate these programs," agency officials said in the report.
The Hardest Hit Fund was created by the U.S. Treasury Department at the height of the housing crisis for the states that had seen the greatest drops in home values, including Florida, where prices dropped by more than a third, on average. The program's goal was to find ways to help people facing major drops in the value of their homes avoid foreclosure.
U.S. Sen. Bill Nelson of Florida had asked the Special Inspector General to audit the program in Florida after the Tampa Bay Times ran a story raising questions about the program.