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Mortgage aid
Hardest Hit Fund resources and expenditures as of June 30 for selected states. Figures are rounded.

Available

Spent
Percentage spent
U.S. $7.6 billion $2.68 billion 35.2
Oregon $220 million $155 million 70.4
Ohio $570 million $208 million 36.5
Indiana $222 million $66 million 29.9
Michigan $499 million $110 million 22.0
Alabama $163 million $28 million 17.2
Source: Special Inspector General for the Troubled Asset Relief Program

Aid exists for Hoosier homeowners

Hardest Hit program extends mortgage relief

Former Indianapolis Colts coach Tony Dungy has told radio listeners about a federal program that can prevent mortgage foreclosures.

"This is your home. The Hardest Hit Fund can help you save it," he says in the spots.

Dungy doesn't evaluate the program's performance. That duty belongs to a special inspector general, whose staff is compiling a report on how effectively states are funneling nearly $8 billion in aid to homeowners who need it.

In the meantime, a newspaper analysis has shown that Indiana ranks far better than most other states in some categories and far worse in others. Through March 31, Indiana had approved most of the mortgage payment assistance applications it had received, but it had seen fewer applications than all but one of the participating states.

Fort Wayne resident Mark Poff is among 1,541 Hoosiers who have gotten aid.

"It has been a godsend, it really has," Poff said, "because I hit the same point that I think so many other people – not just here in the state but the whole country – hit during the Great Recession."

Poff, 51, had lost his job as a radio station programmer and didn't know how he could keep paying $700 a month to satisfy the mortgage on his south-side house, which he had bought in 2006.

The Wells County native was approved for the Hardest Hit Fund in December, a few months before he would turn a volunteer position into a full-time job.

"This to me was the government saying, 'All right, you hardworking people who've been kind of screwed over by everything that's gone down, we're going to help you for a little bit,' " Poff said. "So I've been very, very grateful."

Part of TARP

The Hardest Hit Fund is part of the $700 billion Troubled Asset Relief Program created by the federal government in 2008 to rescue the nation's largest financial services firms and, later, automakers Chrysler and General Motors.

The country's financial meltdown was blamed in large part on the housing bust, which in turn sank the value of banks' mortgage-backed securities. So while TARP aimed to save the finance sector, it also put up $39 billion in housing assistance.

The Hardest Hit Fund received $7.6 billion to reduce or pay off homeowner mortgage debts or provide other aid in states with plunging home prices or escalating jobless rates. The program launched in 2010 in 18 states, including Indiana and Ohio, plus the District of Columbia.

Through the first quarter of 2013, Indiana posted a comparatively high rate (62.6 percent) for approving applications and the lowest rate (9.7 percent) for denying them, according to an analysis published July 13 by the Arizona Republic. A website for the Indiana Foreclosure Prevention Network states that more than 70 percent of applicants have been approved.

But Indiana's percentage of money spent for administration was the highest at 32.4 percent, according to the Arizona Republic, and the percentage of all money spent was 9.7 percent, the lowest such figure among participating states.

It might appear that Indiana either has been sitting on the nearly $222 million it received from the Hardest Hit Fund or has failed to get word out on the program. Only the District of Columbia had seen fewer applications than Indiana's 2,461. The Hoosier State's four neighbors had attracted between 6,062 applicants (Kentucky) and 20,624 (Michigan) through the quarter ending March 31.

"The administrative numbers are skewed," said Mark Neyland, asset preservation director for the Indiana Housing and Community Development Authority, a state government agency that administers the fund.

"Administrative expenses are obviously front-loaded on this thing. It costs money to get this thing up and running," Neyland said.

The Indiana program hired about 12 people and contracted for software systems to process applications and payments. By the time the program ends Dec. 31, 2017, administrative costs will have dropped to 13.7 percent, Neyland predicted, and Indiana will have helped more than 10,000 homeowners.

Neyland rejected any notion that Indiana's Republican state government might refrain from spending TARP money because it is being doled out by a Democratic president's administration.

"There have been no indications to that effect in my tenure here, and I've been here since January of 2012," Neyland said.

"I can only assume that when Indiana accepted this money from Treasury, the intent was to use it as best as possible to benefit Hoosiers," he said.

A recent program update indicates that Indiana had drawn 30 percent of its available money through June 30, ranking it 14th among the 19 participants for spending its allotment.

Slow rollout

The U.S. Treasury Department was slow to sell the Hardest Hit Fund to lenders, according to an April 2012 report by TARP's special inspector general.

"Key stakeholders stated that Treasury's decision to make states responsible for negotiating with servicers without Treasury first using its influence to resolve common issues may have impeded progress in the early months of HHF," the report stated.

A spokesman for the special inspector general's office declined to be interviewed for this story and referred to the 2012 report as the office's appraisal of the program.

The report notes that nine states, including Ohio and Michigan, started their mortgage payment assistance programs with few if any major lenders participating. The report also faulted Treasury for not supplying guidance, information and support to states earlier than it did.

"States were sort of left to their own devices at the outset of this program to get the word out to servicers and get servicers on board," Indiana's Neyland said.

The Indiana Housing and Community Development Authority needed to let struggling homeowners know about the program, too.

The authority started advertising on the radio and the Internet, and it hired the popular Dungy as a spokesman. Neyland said the former coach was paid from donated funds, not TARP money.

California has enlisted Mario Lopez, who starred in the TV show "Saved by the Bell," as its Hardest Hit Fund spokesman.

Local resident Poff said he learned about the program in November while collecting unemployment insurance benefits and attending a résumé-writing workshop offered by WorkOne, the state employment agency. After Poff let workshop leader Hillary Corwin know that he was "trying to figure out how I'm going to keep a roof over my head," Corwin told him about the Hardest Hit Fund and gave him a brochure, and he applied online.

Vickie Evans, a caseworker at the nonprofit Pathfinder Services, helped steer Poff through the application process, which required him to submit property and mortgage records and income tax returns. Everything was completed in a few weeks.

"My best Christmas present last year was when she called me about the 17th of December and said, 'You're approved,' " he recalled.

Increase in aid

A requirement of the program is that recipients be engaged in job training, education or structured volunteer work. About the same time he began the application process, Poff became an office volunteer at HOPE for Animals, a nonprofit spay/neuter clinic, and he accepted a full-time job there in April. Under income guidelines, he still qualifies for a federal mortgage subsidy.

Also in April, Lt. Gov. Sue Ellspermann announced federally approved changes in the Indiana Hardest Hit Fund. The maximum amount of aid each household can receive rose from $18,000 to $30,000, the duration of support increased from 18 months to 24, and eligibility criteria were broadened. Applicants no longer must be receiving unemployment assistance, although a course in financial literacy education was added to the provision requiring training, education or volunteer work.

"We have not been denied anything that we wanted to do," Neyland said. "(Treasury officials) have been very receptive to our ideas and will often lend whatever expertise they may have in helping us design and implement those," Neyland said.

The TARP special inspector general's office said several other states have made changes to their programs.

Indiana's promotion of the mortgage payment assistance program does not identify it as being part of TARP.

"I think it might create confusion when you start to mention TARP in relation to this because then individuals start to think of the automotive industry and what was done there," Neyland said.

"It's better to be more specific about what this program is, how it's designed, but at the same time making sure everyone knows that the money does come from the Department of Treasury," he said.

Poff was pleasantly surprised that his mortgage holder is participating in the Hardest Hit Fund. Years earlier, he said, the lender failed to take action on his application for a lower mortgage interest rate, informing him the application "was just kind of stuck" in the process.

He said his federal assistance is treated as a loan that will be forgiven if he stays in his house for at least 10 years.

"I love this house," Poff said. "A wonderful neighborhood with great people. I just felt very comfortable here."

bfrancisco@jg.net

To reach the fund

Click on this URL:

www.877GetHope.org

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