Though the Hardest Hit Fund was established to act as a safety net for unemployed or underemployed working class Americans, a recent audit of the program found it’s not helping as much as it could.
According to an audit by the Office of the Special Inspector General for the Trouble Asset Relief Program (SIGTARP), more than 80 percent of those denied assistance earned less than $30,000 a year. In fact, in 12 out of the 19 HHF-eligible states, almost three out of every four homeowners assistance denied made less than $30,000 annually.
Denial rates were highest in Michigan and Ohio—especially in cities where General Motors or its suppliers closed plants or laid off workers. Denial rates for under-$30K earners in these cities were: 91 percent in Dayton, Ohio; 89 percent in Cleveland; 85 percent in Flint, Michigan; 83 percent in Saginaw, Michigan; and 82 percent in Detroit.
As GM has announced the expected layoff of another 2,000 workers in early 2017, these numbers could stand to jump even higher.
“When we see that nearly everyone turned down for TARP’s Hardest Hit Fund unemployment assistance earned less than $30,000 in cities where GM or its suppliers laid off workers, we know that the program can do more to open up funding to these and other hard hit workers,” said Christy Goldsmith Romero, Special Inspector General for the Trouble Asset Relief Program.
Ultimately, SIGTARP was unable to determine why denial rates for under-$30,000 earners were so high, as many necessary state agency records were missing or incomplete. Many agencies were also unable to provide specific reasons for denials.
“That needs to be immediately remedied so appropriate analysis on the people denied can be conducted to help working Americans most affected by the financial crisis and the recession,” SIGTARP’s announcement said.
The larger problem, SIGTARP concluded, is that state agencies needs to remove unnecessary restrictions on HHF eligibility—particularly ones that don’t exist in other states or ones that don’t accurately reflect the working class American’s situation.
“In Michigan, workers are ineligible for HHF if they received unemployment benefits or saw their paycheck cut more than 12 months ago,” the announcement said. “Most HHF states do not have this restriction, which is inconsistent with the new normal of unemployment: it often lasts a long time.”
Leveling the playing field is key, the announcement continued.
“Someone in Detroit shouldn’t face more restrictions than someone in another state,” it stated.
Ultimately, SIGTARP hopes to keep improving the program to better serve America’s hardest hit workers.
“With billions of dollars remaining, the full potential of this valuable program can be unlocked,” Romero said. “Removing unnecessary program criteria, making state agencies track why each person was turned down, and letting workers facing an upcoming layoff be eligible now before they fall behind on their mortgage can go a long way to help save homes in these communities until full-time jobs return. Even good programs like HHF can be better, and that’s a goal worthy of pursuit.”
In response to SIGTARP's report, Mark McArdle, Deputy Assistant Secretary for the Office of Financial Stability with the U.S. Department of Treasury, said, “The Hardest Hit Fund (HHF) has helped more than 280,000 homeowners that have experienced economic hardship. Approximately 80 percent of homeowners approved for HHF programs have received assistance due to a hardship resulting from either unemployment or underemployment, and more than 80 percent of homeowners who have received assistance have an income of less than $50,000 per year.”
Click here to view the complete SIGTARP report.
Click here to view Treasury's response letter.