Lew Sichelman is a seasoned writer with 50 years of covering the housing and mortgage markets under his belt. His biweekly Inman column publishes on Tuesdays.
While people were losing their homes to foreclosure over the last so many years, some of the folks who are supposed to be helping them were having the time of their lives with the federal dollars meant for struggling homeowners.
In a blistering 85-page report, the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) says more than $400,000 in “critical taxpayer dollars” were spent by some state housing agencies to fly around the country to attend non-germane conferences and hole up in luxury hotels and resorts.
According to SIGTARP, the North Carolina Housing Finance Agency (HFA) spent nearly $130,000 on annual housing counselor conferences. Before homeowners received a single dime in federal aid, the TARP overseer said, housing counselors enjoyed an evening reception with a carved beef station and strawberry shortcake martinis. Later, a guest speaker lectured on “Motivation by chocolate” at a cost to the Troubled Asset Relief Program (TARP) of $2,500. And North Carolina is hardly the only transgressor. The Ohio HFA charged TARP more than $7,000 to hold counseling conferences at zoos, where animal presentations were made.
Meanwhile, two Florida HFA officials stayed at luxury hotels while attending more than a dozen conferences, some of which had nothing to do with TARP’s Hardest Hit Fund (HHF) or offered only an hour or two of pertinent sessions. And the deputy executive director of Georgia’s agency made ten trips on the government dole to events that had nothing to do with TARP.
What exactly is TARP and SIGTARP
TARP is actually a group of programs run by the U.S. Treasury designed to stabilize the country’s financial system in the wake of the 2008 economic crisis, otherwise known as the Great Recession. Millions of dollars allocated to TARP went into programs designed to prevent foreclosures.
One of those programs, the HHF, is supposed to act as a temporary safety net so unemployed or underemployed working class owners could save their homes. The $9.6 billion fund was created in 2010 to help people in 18 states and the District of Columbia who were staggered by the financial crisis and about to lose their homes.
State housing finance agencies administer the funds, and federal taxpayers have paid nearly $860 million for them to cover their expenses in so doing. By the time the program runs out in December 2021, you and I will have paid them “at least” $206 million to cover their costs.
SIGTARP, a federal law enforcement agency that targets crimes at financial institutions and acts as an independent watchdog to protect taxpayers’ interests, found that some HFAs violated federal cost rules by charging the fund $411,658 in prohibited travel and conference costs.
That amount may seem insignificant when compared to a billion dollar administrative budget. But as the report pointed out, any dollar wasted or spent inappropriately is one less dollar meant for needy homeowners.
“Too many times, SIGTARP has found state officials using TARP dollars for their own enjoyment instead of helping families stay in their homes,” Special Inspector General Christy Goldsmith Romero said. “Flying around the country, staying in luxury hotels, attending conferences beach-side and at other vacation destinations are not ‘must have’ costs for a local foreclosure prevention program.”
Part of the problem with misusing government funds lies with the U.S. Treasury’s failure to enforce the rules to ensure that taxpayer dollars reach their intended recipients. The rules were put in place when the fund was created, but the Treasury has justified its inaction, according to SIGTARP’s report, because the program will end in two-and-a-half years.
“That’s not, and there never is, an excuse to allow for waste, abuse and improper use in government programs,” Romero said.
Worst offenders and non-guilty parties
The latest report is the third audit finding waste and unnecessary expenses in the HHF. Previous accounting uncovered more than $11 million in improper spending.
In the new study, SIGTARP found that some state agencies charged TARP a total of more than $100,000 to attend a four-day National Council of State Housing Agencies (NCSHA) conference without documenting why each individual’s participation was necessary.
Florida HFA was the worst offender, charging Uncle Sam nearly $17,900. (The Florida agency also charged TARP $20,000 for two senior officials to travel, one to 15 conferences and the other to 17. Some of the four-day meetings had no sessions regarding the HHF, and others had just one 1.5-hour seminar relating to the fund. In some cases, they stayed at a J.W. Marriott; in others, a Hyatt Regency.)
But not all housing finance agencies are guilty. Officials from Alabama, California, Kentucky, Michigan, Nevada, New Jersey and D.C. charged TARP nothing to attend the NCSHA conference, and Rhode Island passed along just $16 of its costs. A Michigan agency official told SIGTARP that it did not charge the fund because “99 percent of the sessions are non-HHF and geared more toward HFA business.”
In other instances, the inspector general found that 14 state agency officials charged TARP for personal travel when they extended their trips an extra day before or after NCSHA conferences. In other cases, it found that officials stayed in far more expensive hotels than the rules allow. And in yet other cases, they charged TARP for multiple non-HHF trips.
Lew Sichelman is a seasoned writer with 50 years of covering the housing and mortgage markets under his belt. His biweekly Inman column publishes on Tuesdays.
