SIGTARP 15-001 April 21, 2015

Treasury Should Do Much More To Increase

the Effectiveness of the TARP Hardest Hit Fund 

Blight Elimination Program
SIGTARP 15-001 April 21, 2015
Treasury Should Do Much More To Increase the Effectiveness of the

TARP Hardest Hit Fund Blight Elimination Program

SIGTARP 15-001 April 21, 2015

Summary

By 2013, three years into the Troubled Asset 

Relief Program’s (“TARP”) foreclosure 

prevention program known as the Housing 

Finance Agency Innovation Fund for the 

Hardest Hit Housing Markets (“Hardest Hit 

Fund,” or “HHF”), the 19 state housing 

finance agencies (“HFAs”) that Treasury has 

administering the program had drawn down

only 27% of TARP funds available, and had 

helped only 109,874 homeowners. In June 

2013, Treasury approved a new category of 

HHF assistance – the Blight Elimination 

Program – the demolition and “greening” of 

vacant and abandoned single-family and 

multifamily structures. Unlike other HHF 

assistance, the Blight Elimination Program 

does not provide direct assistance to 

homeowners, instead allowing for substantial 

payments to cities or counties, land banks, 

non-profit and for-profit organizations for 

demolition and other blight elimination 

activities. Since 2013, Treasury has 

increasingly reallocated a portion of HHF 

funds from other HHF programs that provide 

direct help to homeowners for a total of 

approximately $372 million for the HHF Blight 

Elimination Program in six states (Michigan, 

Alabama, Illinois, Indiana, Ohio, and South 

Carolina). 

What SIGTARP Found

Treasury’s role in HHF has contrasted with 

its role in other TARP programs. Throughout 

TARP’s six years, Treasury has not waited 

until the end of a TARP program to measure 

progress and success toward the goals set 

out by Congress for TARP, nor has Treasury 

left achievement of the TARP goals to 

chance. Instead, Treasury has worked with 

regulators and others early to set target 

outcomes – what Treasury expected to 

achieve by using TARP funds. By measuring 

and reporting on progress, Treasury gained 

insight that led to Treasury making changes 

in TARP programs to make them more 

effective with the end in mind. Treasury has 

not set target outcomes with the Hardest Hit 

Fund, which has led to a lack of 

accountability, and lost opportunities to 

increase the effectiveness of HHF midprogram. Homeowners have suffered. With 

no baseline to measure progress, the 

aggregate number of homeowners the states 

estimated helping with HHF has dropped by 

nearly half (44%). If Treasury had worked 

with each state HFA to set a realistic target 

outcome for the number of homeowners to 

be helped by HHF, rolled that into a Treasury 

target, and measured against that target, 

Treasury could have gained insight into 

which states needed Treasury’s help or what 

improvements could have been made. 

Treasury’s desire to use TARP’s Hardest Hit 

Fund to seek locally tailored solutions 

administered by the 19 states does not 

relieve Treasury of its important 

responsibilities to ensure that TARP 

programs are operating in the most effective 

manner and are on track to achieve the 

TARP goals. The two concepts of Federal 

responsibility and locally tailored solutions 

are by no means mutually exclusive. HHF is 

not a grant program. It is an investment 

made by taxpayers, nationwide. Treasury, 

not each state, has an interest in leveraging 

the resources of all 19 jurisdictions with

Treasury resources to provide further relief to 

states unable to help homeowners on their 

own. More is required of Treasury than 

dollars. Treasury cannot defer its 

responsibility to anyone to ensure that HHF 

progresses in the most effective way to 

achieve the TARP goals of protecting home 

values and preserving homeownership. 

Congress put Treasury in charge of TARP, 

so Treasury must act to fulfill that 

responsibility. It cannot do that with limited 

knowledge and involvement. 

SIGTARP is not expressing an opinion as to 

whether the use of TARP funds for blight 

elimination activity is an appropriate use of 

TARP funds. Just as it has done with other 

TARP programs, Treasury should not wait 

until the end of HHF to measure whether the 

HHF Blight Elimination Program is on track to 

achieve TARP goals (protecting home values 

and preserving homeownership), nor should 

Treasury leave achievement of the goals to 
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TARP Hardest Hit Fund Blight Elimination Program

SIGTARP 15-001 April 21, 2015

chance. Treasury should follow the same 

pattern with HHF that Treasury has taken in 

other TARP programs to gain insight, be 

actively involved, and take action beyond 

initial TARP dollars to ensure the TARP 

funds are used effectively to ensure the 

program’s success, including for demolition 

of vacant properties. However, SIGTARP 

has found that is not what Treasury is doing.

SIGTARP found that the HHF Blight 

Elimination Program is designed in a way 

that leaves Treasury in the dark on 

strategies, decisions, and blight elimination 

activity conducted under HHF and paid for 

with TARP dollars. Treasury has allowed the 

six participating state HFAs to place much of 

the decision making and the actual blight 

elimination activities in the hands of city or 

county/land bank/non-profit/for-profit 

partners, whose identities are unknown to 

Treasury, whose activities using TARP funds 

are unknown to Treasury, whose strategies 

and decisions on how to execute blight 

elimination under HHF are unknown to 

Treasury, that are not under contract with 

Treasury or even in contact with Treasury, 

and over which Treasury conducts no 

oversight. Treasury has very limited 

knowledge about blight elimination activity 

paid for with TARP dollars and is not keeping 

itself informed or gaining insight of critical 

activities taking place under the HHF Blight 

Elimination Program. 

Treasury does not have or monitor the 

contracts and subcontracts for which TARP 

funds are the source of payment, and neither 

do the states. Treasury does not require a 

detailed accounting or know the details of 

contracts or subcontracts, or even the 

recipients. Treasury’s HHF Program Director 

told SIGTARP that contract awards are “the 

state’s business.” However, Ohio HFA 

officials told SIGTARP that the Ohio HFA 

“does not collect all documentation pertaining 

to current and future contracts for the local 

land banks. We require thorough support 

documentation, including invoices and proof 

of payment, for all expenses that are 

reimbursed with HHF funds.” A Michigan 

HFA official told SIGTARP it does not 

monitor or approve the contracts or even 

have a listing of the entities that their land 

banks or other partners have contracted with. 

 

Unlike other blight demolition funds these 

states may receive, TARP funds are not 

grant funds and this is not a grant program. 

Greater knowledge and insight by Treasury 

of the participants in HHF demolition 

activities, strategies, and decisions, blight 

elimination activity, and expenditures do not 

take away a state’s ability to tailor local 

solutions. The opposite is true. Treasury’s 

role as a steward of TARP is more than 

about money. These states that are still 

struggling from the crisis need Treasury’s 

involvement and full support.

Being in the dark makes it difficult for 

Treasury to fulfill its important responsibilities 

as the steward of TARP. Limited knowledge 

about strategies, decisions and blight 

elimination activity decreases Treasury’s 

ability to ensure that HHF in this area is on 

track to success or that states and city or 

county local partners are proceeding with the 

most effective use of TARP funds, and 

decreases Treasury’ ability to protect against 

fraud, waste, and abuse, which could 

diminish the effectiveness of the HHF Blight 

Elimination Program. Treasury can defer 

administration of a TARP program to another 

entity, but Treasury cannot defer its 

responsibility and oversight under the TARP 

law to ensure that a TARP program is 

successful, nor should it because these are 

the hardest-hit states that Treasury selected 

to help. Responsibility requires knowledge. 

Treasury cannot improve what it does not 

know. Treasury cannot protect what it does 

not know. Treasury cannot bring 

transparency to what it does not know.

SIGTARP found that Treasury takes a 

hands-off approach to the HHF Blight 

Elimination Program and has very limited 

involvement in the planning or execution of 

the program. Treasury has not conducted 

comprehensive planning that could ensure 

program success, ensure that TARP funds 

are spent in the most effective manner, and 

protect HHF against the risk of fraud, waste, 

and abuse. Treasury has left much of the 

planning to the HFAs, which have left much 
Treasury Should Do Much More To Increase the Effectiveness of the

TARP Hardest Hit Fund Blight Elimination Program

SIGTARP 15-001 April 21, 2015

of the planning to the city or county local 

partners. 

SIGTARP found that, unlike other TARP 

programs, Treasury has not set a target 

outcome that it wants the HHF Blight 

Elimination Program to achieve in order for 

Treasury to ensure that it will meet the highlevel goals of stabilized neighborhoods and 

decreased foreclosures, instead deferring to 

each state HFA to set the target outcome. 

However, the state HFAs are not actually 

setting target outcomes, but instead are 

deferring to the city or county/land bank/nonprofit/for-profit partners. The HHF Blight 

Elimination Program is designed so that the 

city or county/land bank/non-profit/for-profit 

partners are responsible for defining the 

target outcome and measuring their own 

progress toward that outcome.

SIGTARP recognizes the challenge of using 

a Federal program to offer local solutions 

administered by state agencies and 

Treasury’s desire to give states flexibility 

because HFAs know best about the 

problems in their states. However, flexibility 

should not mean free rein. 

Flexibility should not mean that states or city 

or county/land bank/non-profit/for-profit 

partners set the target outcome of a Federal 

TARP program. That is Treasury’s 

responsibility under TARP law. If Treasury 

does not set a target outcome for HHF blight 

elimination, it is leaving the success of a 

TARP program to chance. This leads to a 

lack of accountability at the city or county, 

state, and Treasury level. 

Treasury defining target outcomes that it 

expects to achieve does not take away the 

flexibility of states, but instead gives insight 

to Treasury and the states into whether 

improvements can be made to make the 

HHF Blight Elimination Program more 

effective as the program progresses. 

Treasury has an opportunity right now to 

increase the effectiveness of the program. 

However, that opportunity will diminish with 

time given the fast pace of demolition activity. 

If Treasury sets target outcomes now, 

Treasury and the states would have 

something to measure progress against to 

determine if each state is on track. 

Spending the available TARP money should 

not be Treasury’s end goal. State HFA 

officials from Michigan and Ohio told 

SIGTARP that the only goal Treasury has 

given them is to spend the HHF blight money 

by December 31, 2017. Just as the highlevel goals of each of Treasury’s TARP 

investments were not met upon Treasury 

investing TARP funds, Treasury’s high-level 

goals to stabilize neighborhoods and 

decrease foreclosures are not met upon 

Treasury investing funds for blight 

elimination.

This type of comprehensive planning is not 

new to Treasury and is a recognized best 

practice for the Federal Government that 

does not harm a state’s ability to tailor local 

solutions. Knowing the target outcomes that 

Treasury is trying to achieve provides a 

framework for states and cities or counties to 

make choices that are locally tailored, and 

are consistent with Federal objectives. Just 

as Treasury has worked with regulators and 

others before to develop target outcomes for 

TARP programs, Treasury could use its own 

resources and expertise on economic 

outcomes in consultation with each of the six 

participating states to set Treasury-defined 

target outcomes it wants, that are realistic for 

that state. These could include target level of 

decrease in foreclosures, vacancy rates, 

percentage of properties with negative 

equity, crime rates, and target level increase 

in home values. 

Treasury cannot assume that any amount of 

demolition of vacant properties in any area of 

a city or county will result in stabilized home 

prices and decreased foreclosures. Treasury 

has already conducted an economic analysis 

for Detroit that assumed that the impact 

could only be felt within a 200-foot radius of 

the demolished property. Treasury estimated 

that demolishing a vacant house and 

greening the lot in Detroit would lower the 

default probability of nearby properties by 

between 0.7 and 1.7 percentage points on 

average with likely impact on foreclosure 

rates toward the 1.7 percentage point end, 
Treasury Should Do Much More To Increase the Effectiveness of the

TARP Hardest Hit Fund Blight Elimination Program

SIGTARP 15-001 April 21, 2015

which could serve as a baseline for a target 

outcome. 

Without establishing target outcomes for 

each state (in consultation with each state), 

Treasury will not be able to see which states 

need Treasury’s help or additional oversight 

to ensure that the HHF Blight Elimination 

Program is on track for success. The state 

HFAs do not have the level of expertise and 

resources of Treasury on economic 

outcomes. If Treasury through its Economic 

Policy group can conduct an economic 

analysis to determine the target outcome of 

HHF demolition for one city, it can conduct 

them for others. Treasury could combine its 

expertise and resources with the states to 

conduct economic analyses that lead to 

Treasury setting realistic target outcomes 

that the states could work towards achieving. 

Neither Treasury nor the state HFAs have 

developed performance indicators or are 

measuring the impact of demolition, which 

decreases Treasury’s ability to see areas for 

improvement to ensure effective use of 

TARP dollars and success in TARP goals. 

The states can and should develop 

performance indicators at the start of the 

program so that performance can be 

measured as the program progresses, but 

that has not happened. Treasury is only 

requiring reporting on the number of 

properties demolished and the average cost. 

Demolition is not the end that Treasury 

should have in mind. It is the outcome of that 

demolition, not the demolition itself. 

Although Treasury should have developed its 

target outcomes at the beginning of the 

program in 2013, it is not too late for 

Treasury to do so now, particularly as only 

three of the six states have started 

demolishing properties. Congress and the 

public rightfully expect Treasury to administer 

the program and ensure that TARP funds are 

appropriately spent and are achieving the 

desired goals.

SIGTARP found that Treasury has not taken 

a risk-based approach to identify and 

mitigate risks that could form barriers to the 

most effective use of TARP funds for 

demolition activity or could lead to fraud, 

waste, and abuse. The design of the HHF 

Blight Elimination Program that places much 

of the control and decision making in the 

hands of the city and county/land banks far 

removed from Treasury, which conduct work 

through contractors removed even farther 

from Treasury, produces certain risks that 

Treasury should assess and mitigate through 

comprehensive planning. Treasury has an 

oversight responsibility to ensure that the 

state HFAs, and their city or county local 

partners, are ready for, and can effectively 

handle, any increase in demolition and other 

activities under HHF. Even if some of the six 

state HFAs in the HHF Blight Elimination 

Program have experience with blight 

elimination, the TARP funds allocated for 

blight elimination will likely result in a 

significant increase in the amount of blight 

elimination activities these states have 

conducted. By allowing itself to be in the 

dark, Treasury has created a TARP program 

with very limited transparency to Treasury 

and the public, which impacts risk.

Given that Treasury decided to make a 

TARP investment in eliminating vacant 

properties, Treasury should do much more to 

fulfill its oversight responsibilities and ensure 

success. Federal dollars must come with 

some Federal involvement, guidance, 

assistance, transparency, and oversight. 

Homeowners deserve the same 

extraordinary Treasury action and support 

that Treasury gave the largest TARP 

institutions. Treasury cannot do that if it 

continues to be in the dark, with a hands-off 

approach and involvement, that limits 

transparency, oversight, and can impact risk. 

When HHF ends in December 2017, it is 

Treasury, not the individual six states in the 

HHF Blight Elimination Program, that is 

responsible for reporting whether Treasury’s 

use of those TARP funds successfully 

achieved TARP goals.

What SIGTARP Recommends

In this report, SIGTARP made nine 

recommendations aimed at increasing the 

effectiveness of Treasury’s Hardest Hit Fund 
Treasury Should Do Much More To Increase the Effectiveness of the

TARP Hardest Hit Fund Blight Elimination Program

SIGTARP 15-001 April 21, 2015

Blight Elimination Program. SIGTARP’s

recommendations include that Treasury 

ensure that the state HFAs and their city or 

county local partners can effectively handle 

any increase in demolition and other 

activities under HHF, that Treasury keep 

informed and gain insight of critical activities 

taking place under HHF blight elimination at 

both the Treasury and state HFA levels, and 

that Treasury increase transparency by 

publicizing blight-specific details on 

Treasury’s website. SIGTARP also 

recommends that Treasury engage in 

comprehensive planning, set target 

outcomes, and require state HFAs 

participating in blight elimination activities 

under TARP to develop performance 

indicators to ensure that blight elimination 

under HHF progresses in the most effective 

way. Finally, SIGTARP recommends that 

Treasury should require detailed accounting 

and reporting by state HFAs on how TARP 

funds are spent reimbursing local partners for 

blight elimination activities under HHF, and 

require state HFAs to develop a system of

internal controls targeted specifically at blight 

elimination. 

Treasury provided comments to the draft 

report. SIGTARP addressed those 

comments where applicable. Treasury 

generally disagreed with SIGTARP’s findings 

citing to the expertise of states and need for 

states’ flexibility, an issue that SIGTARP has 

addressed in the audit. Treasury did not 

agree to implement SIGTARP’s 

recommendations, but said they would 

consider them. 
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SIGTARP 15-001 April 21, 2015

Table of Contents

Introduction .................................................................................................................................................... 1

Background .................................................................................................................................................... 3

The HHF Blight Elimination Program Is Designed in a Way that Leaves Treasury in the Dark on 

Strategies, Decisions, and Blight Elimination Activity Under HHF and Paid for With TARP 

Dollars......................................................................................................................................................... 9

Treasury does not know the identities of the city or county/land bank/non-profit/for-profit 

partners that are making key decisions on blight elimination and will receive TARP dollars .............. 9

Treasury’s HHF Blight Elimination Program puts most of the decision making in the hands of 

city or county land banks, non-profit organizations, and in some instances for-profit 

organizations whose identities are unknown to Treasury..................................................................... 10

SIGTARP found that Treasury’s HHF Blight Elimination Program is designed for state HFAs to 

pay TARP dollars to partners including city or county land banks, non-profit organizations, 

and in some instances for-profit organizations, whose identities are unknown to Treasury, for 

HHF blight elimination activities ......................................................................................................... 11

Treasury has very limited knowledge and is not keeping itself informed or gaining insight of 

critical activities taking place under HHF blight elimination being paid for with TARP dollars....... 13

Greater knowledge and insight by Treasury of the participants, strategies, decisions, blight 

elimination activities, and expenditures in HHF blight elimination activities do not take away 

a state’s ability to tailor local solutions – the opposite is true............................................................. 14

Treasury Takes a Hands-Off Approach to the HHF Blight Elimination Program and Has Very 

Limited Involvement in the Planning or Execution of the Program......................................................... 15

Treasury has not conducted comprehensive planning that could ensure the success of the 

program, that TARP funds are spent in the most effective manner and are protected against 

the risk of fraud, waste, and abuse ....................................................................................................... 16

Treasury has not set target outcomes that it wants the HHF Blight Elimination Program to 

achieve in order for Treasury to ensure that it will meet the high-level goals of stabilized 
Treasury Should Do Much More To Increase the Effectiveness of the

TARP Hardest Hit Fund Blight Elimination Program

SIGTARP 15-001 April 21, 2015

neighborhoods and decreased foreclosures, instead deferring to each individual state to set 

the target outcome................................................................................................................................. 17

Treasury-defined target outcomes that Treasury expects to achieve do not take away the 

flexibility of states, but instead give insight for Treasury and the states into whether 

improvements can be made to make the HHF Blight Elimination Program more effective as 

the program progresses ........................................................................................................................ 18

Treasury could use its resources and expertise on economic outcomes in consultation with each 

state to set Treasury-defined target outcomes that are realistic for that state ..................................... 19

Neither Treasury nor the state HFAs have developed performance indicators or are measuring 

the impact of demolition, which decreases Treasury’s ability to see areas for improvement to 

ensure effective use of TARP dollars and success in TARP goals........................................................ 22

Treasury Has Not Taken a Risk-Based Approach To Identify and Mitigate Risks that Could Form 

Barriers to the Most Effective Use of TARP Funds for Demolition Activity or Could Lead to 

Fraud, Waste, and Abuse .......................................................................................................................... 26

Treasury’s oversight is impacted by state HFAs being in the dark on Blight Elimination 

Program activities being conducted by their land banks and other partners....................................... 26

Treasury has an oversight responsibility to ensure that the state HFAs, and their city- or countylevel partners, are ready for, and can handle, increases in demolition and other work 

contemplated under HHF ..................................................................................................................... 27

By allowing itself to be in the dark, Treasury has created a TARP program with very little 

transparency to Treasury and to the public, which could impact risk.................................................. 28

Conclusion.................................................................................................................................................... 31

Recommendations........................................................................................................................................ 46

Management Comments and SIGTARP’s Response ................................................................................... 48

Appendix A – Objectives, Scope, and Methodology................................................................................... 49

Appendix B – Acronyms and Abbreviations ............................................................................................... 51

Appendix C – Audit Team Members........................................................................................................... 52

Appendix D – Management Comments....................................................................................................... 53
TREASURY SHOULD DO MUCH MORE TO INCREASE THE EFFECTIVENESS OF THE TARP HARDEST HIT FUND BLIGHT 

ELIMINATION PROGRAM 1

SIGTARP 15-001 April 21, 2015

Introduction

Three years into TARP’s Hardest Hit Fund (“HHF”), with the program not 

reaching nearly as many homeowners as the 18 states and the District of 

Columbia (“19 jurisdictions”) housing finance agencies (“HFAs” or the “state 

HFAs”) had estimated to help, the Michigan HFA proposed to Treasury that it be 

allowed to reallocate HHF funds away from existing HHF programs to the 

demolition of vacant properties, which Michigan was already doing through nonTARP Federal and state grant programs. By March 31, 2013, Treasury reported 

HHF had helped 109,874 homeowners compared to the 500,000 homeowners the 

states estimated helping with HHF, and the HFAs in the 19 jurisdictions had 

drawn down only 27% of TARP’s allocated $7.6 billion, leaving nearly 

$5.5 billion in available TARP funds to help homeowners. 

In June 2013, Treasury created the Blight Elimination Program under HHF, 

according to an internal Treasury memorandum. Treasury described the program 

as the demolition and “greening” of certain vacant and abandoned single-family 

and multifamily structures. Previously, Treasury used HHF to make payments to 

homeowners or to mortgage servicers to help keep homeowners in their homes. 

TARP’s Blight Elimination Program allows for substantial payments to city or 

county/land bank/non-profit/for-profit partners for demolition and other blight 

elimination activities. Treasury has approved six HHF state HFAs to reallocate 

approximately $372 million in TARP funds from other HHF programs for blight 

elimination. 

Although created in June 2013, TARP’s HHF Blight Elimination Program did not 

see a single demolition until the fourth quarter of 2013, and no significant 

demolition until the first quarter of 2014, when Treasury reported 124 

demolitions. Only two of the six states (Michigan and Ohio) have started 

demolitions under HHF, according to Treasury reports. An official from Indiana 

HFA told SIGTARP that they have had 50 demolitions. 

As part of SIGTARP’s continuing oversight of TARP, SIGTARP initiated an 

audit in October 2014 of the HHF Blight Elimination Program. The specific 

objectives of this audit were to determine:

 the status of HHF’s Blight Elimination Program;

 Treasury’s role in the program; and 

 factors affecting the implementation of the HHF Blight Elimination Program. 

SIGTARP conducted this audit in accordance with generally accepted 

government auditing standards established by the Government Accountability 

Office (“GAO”). SIGTARP interviewed officials at Treasury’s Office of 
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SIGTARP 15-001 April 21, 2015

Financial Stability (“OFS”), and at Michigan, Ohio, and Indiana HFAs. For a 

complete discussion of the audit’s scope and methodology, see Appendix A.
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SIGTARP 15-001 April 21, 2015

Background

When Congress authorized the creation of TARP in 2008, the nation was in the 

midst of a housing crisis with a record number of foreclosures. Congress did not 

pass TARP until it was amended to include assistance to homeowners. The 

promise of TARP was to be more than a bailout of Wall Street. Former Treasury 

Secretary Henry M. Paulson, Jr., wrote in his book, On the Brink: Inside the Race 

to Stop the Collapse of the Global Financial System, that Treasury “devised 

TARP to save the financial system.” However, that was not Congress’ sole intent 

when it approved the final TARP law. Congress did not enact Treasury’s initial 

three-page proposal, submitted on September 20, 2008, which would have 

authorized Treasury to spend TARP funds, taking into consideration “providing 

stability or preventing disruption to the financial markets or banking system and 

protecting the taxpayer.”1

 The final TARP law states a dual purpose of restoring 

stability and liquidity, and ensuring that Treasury use the funds in such a way that 

would do more than just save the financial system, but also protect investments of 

individuals and families across the nation, including home values, life savings, 

retirement funds, and college accounts, to preserve homeownership, and to 

promote jobs and economic growth. Former Secretary Paulson recounts in his 

book:

The House and Senate needed to be able to sell any legislation we 

came up with, and the political calculus was tricky just weeks 

before an election. Averse to bailouts, voters would never grasp the 

pain of a meltdown unless they experienced it. As Barney [Frank] 

put it: “No one will ever get reelected avoiding a crisis.” Nancy 

Pelosi noted: “we have to position this as stimulus and relief for 

the American homeowner.”

Congress explicitly stated in the final TARP law that a purpose of TARP is to 

ensure that the authority given to the Treasury Secretary and such facilities is used 

in a manner that, among other things, protects home values, preserves 

homeownership, and promotes jobs and economic growth. 

On February 19, 2010, Treasury announced TARP’s Hardest Hit Fund, with the 

goals to help families in those states determined by Treasury to be hit the hardest 

by the bursting of the housing bubble, which would allow for “locally focused” 

programs, support “innovative” foreclosure prevention efforts, prevent 

foreclosures, and stabilize the housing market. Treasury designed the HHF 

program to provide $7.6 billion in TARP funding for foreclosure prevention 

programs administered by housing finance agencies in 18 states and the District of 

 1 See SIGTARP’s Initial Report to the Congress dated February 6, 2009, “Advancing Economic Stability Through 

Transparency, Coordinated Oversight and Robust Enforcement.”
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SIGTARP 15-001 April 21, 2015

Columbia. HFAs are entities created by state law that help provide affordable 

housing, among other responsibilities. As SIGTARP previously reported, one 

Treasury official stated that HHF offered locally tailored solutions, something that 

the nationally focused TARP housing program Home Affordable Modification 

Program (“HAMP”) did not. The Administration stated in announcing HHF that 

HFAs were “already familiar with the urgent challenges facing their communities 

and have demonstrated the ability to address those challenges.”

Since the beginning of the Hardest Hit Fund, Treasury has repeatedly stated the 

importance of transparency and oversight of TARP’s housing programs. Shortly 

after HHF was established, Treasury’s then-Chief of Homeownership 

Preservation Office, Phyllis Caldwell, who was in charge of implementing HHF, 

testified before the House Financial Services Subcommittee on Housing and 

Community Opportunity in November 2010 about the importance of transparency 

and accountability to the public on TARP’s housing programs, stating: “To 

protect taxpayers and ensure that TARP dollars are directed toward promoting 

financial stability, Treasury established rigorous transparency and accountable 

measures for all of its programs, including all housing programs.”

SIGTARP previously reported in its April 2012 audit report that Treasury could 

do more to improve transparency because tracking performance of all HHF 

programs would require a taxpayer to gather information from 19 separate HFA 

websites. As SIGTARP reported, HFAs publish quarterly numeric data on their 

own websites, but without stated goals, it is difficult to assess performance. 

Treasury states publicly its commitment to increasing transparency in TARP 

housing programs, including HHF. Treasury’s website section on TARP stresses 

Treasury’s efforts “[t]o ensure that Treasury’s housing programs operate in full 

view of the public....” Reiterating the importance of this transparency, Treasury 

included similar language in its retrospective reports on TARP. Particularly, 

Treasury’s Four Year Retrospective Report, issued in March 2013, reminded: 

“Treasury is committed to making sure that every TARP program is operating at 

the highest standards of transparency and accountability. This includes providing 

regular and comprehensive information about how TARP funds are being spent, 

who has received them and on what terms, and how much has been recovered to 

date.” The report added: “Treasury is equally committed to ensuring that 

TARP’s housing initiatives are being implemented to the highest level of 

transparency.” Concerning HHF, Treasury stated in the report: “Treasury makes 

available the latest state-by-state information from HFAs that are administering 

local programs under the Hardest Hit Fund. Visitors to Treasury’s website can 

also find each state’s plan, contract agreements, and their latest quarterly report.”

As SIGTARP reported in its April 2012 audit report, and in quarterly reports to 

Congress since, HHF is a program that has faced difficulties in reaching the 
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SIGTARP 15-001 April 21, 2015

intended number of homeowners.

2 As SIGTARP reported, HHF has experienced 

significant delays in providing help to homeowners due to several factors, 

including a lack of comprehensive planning by Treasury and a delay in 

participation by large mortgage servicers and the Government-sponsored 

enterprises (“GSEs”) Federal National Mortgage Association (“Fannie Mae”) and 

Federal Home Loan Mortgage Corporation (“Freddie Mac”). At that time, two 

years into the program, HHF funding had helped 30,640 homeowners, with nearly 

all (98%) of the help for unemployment assistance or reinstatement of past due 

amounts, the only types of assistance for which the GSEs directed servicers to 

participate.3

 Of the 98%, the great bulk (78%) of the HHF help to homeowners 

has been for unemployment assistance.

At the end of fiscal year 2012, Treasury began looking at the possibility of using 

HHF funds for the demolition of vacant houses. On September 24, 2012, 

Treasury convened an interagency meeting, “Residential Property Vacancy, 

Abandonment, and Demolition,” with Congressional staff, representatives from 

the executive branch and regulatory agencies, and housing experts. By 

March 31, 2013, three years after the program start, HHF had helped 109,874 

homeowners compared to the 500,000 homeowners that state HFAs in the 19 

jurisdictions collectively estimated to help with HHF, and states had drawn down 

only 27% of the allocated $7.6 billion in TARP funding, leaving nearly 

$5.5 billion available. 

In June 2013, Treasury approved a sixth category of HHF program assistance –

the Blight Elimination Program – the first HHF program not to provide direct 

assistance to homeowners. Michigan proposed to Treasury in May 2013 that it be 

allowed to use HHF funds for blight elimination. Michigan was already 

participating in the Neighborhood Stabilization Program (“NSP”), a U.S. 

Department of Housing and Urban Development (“HUD”) grant program for 

blight elimination, as well as state-funded blight elimination. Treasury’s 

Economic Policy group conducted an economic analysis to estimate the 

stabilization of home prices and the decrease in foreclosures that would come 

from demolitions in the City of Detroit. Subsequent to its economic analysis, 

Treasury approved changes to its HHF contract with Michigan. Treasury’s 

June 2013 memorandum includes “Blight Elimination Program (new), to focus on 

decreasing foreclosures and stabilizing neighborhoods through the demolition and 

greening of vacant and abandoned single family and multi-family structures in 

designated areas across Michigan.” Treasury approved the HHF Blight 

Elimination Program of single-family residential (1-4 units) and multifamily 

 2 See SIGTARP audit report, “Factors Affecting Implementation of the Hardest Hit Fund Program,” issued 

April 12, 2012; and see SIGTARP’S Quarterly Report to Congress dated January 28, 2015. 3 Treasury approved HHF programs in five categories of assistance: (1) principal reduction; (2) second-lien reduction or 

payoff; (3) reinstatement through payment of past due amounts; (4) unemployment/underemployment assistance; or 

(5) transition assistance. 
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(4+ units) properties in Michigan funded with $100 million of Michigan’s HHF 

funds, reallocating those funds from other HHF programs as Michigan had 

proposed.

4

 Treasury approved per property costs of $25,000 for actual costs 

incurred to acquire, demolish, green, and maintain property for a period not to 

exceed five years. Treasury’s internal memorandum states that the estimated 

number of properties to be demolished is 4,000, if each property receives the 

maximum funding amount of $25,000. 

Since that time, Treasury has increasingly allocated a significant portion of HHF 

funds to blight elimination programs. These are not new funds authorized by 

Treasury, but instead, funds that the states had reallocated from their other 

existing HHF programs that had provided direct help to homeowners. Treasury 

expanded the HHF Blight Elimination Program to provide additional TARP 

funding to Michigan (up to $175 million) and to five additional states, Ohio, 

Indiana, Illinois, South Carolina, and Alabama, allocating approximately 

$372 million in TARP funding, as shown in the following table. Treasury also set 

a cap on allowable costs to be paid for with TARP funds per property, to include 

costs such as demolition and greening.

 4 The proposal also increased Michigan’s administrative expense allocation from $53 million to $60 million.
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TABLE 1

Source: SIGTARP-prepared table based on the state HFA’s term sheets, as amended in each state’s Housing Participation Agreement with Treasury, 

and the data call.

STATES PARTICIPATING IN TARP’S HHF BLIGHT ELIMINATION PROGRAM

State

Allocated TARP 

Dollars for 

Blight 

Elimination

Alllowable 

Costs Per 

Property

(TARP $)

Estimated 

Number of 

Properties 

To Be 

Demolished

Timing of 

Treasury’s 

Approval of 

State for BEP

Alabama $25,000,000

Maximum 

$25,000 per 

structure

1,000 Sept. 1, 2014

Illinois $1,900,000

Maximum 

$35,000 per 

structure

50 Summer 2014

Indiana $75,000,000

Maximum 

$25,000 per 

structure

Between 

3,000 and 

5,000

Q1 2014

Michigan $175,000,000

Maximum 

$25,000 per 

structure

7,000 Late 

November 2014

Ohio $60,000,000

Maximum 

$25,000 per 

structure

5,000

Jan. 1, 2014

(effective contracts 

with partners)

S.C. $35,000,000

Maximum 

$35,000 per 

structure

Between 

1,000 and 

1,300

Q3 2014

$370,000,000

Like Michigan’s HFA, three other state HFAs were already involved with blight 

elimination, using grants in other Federal, state, or local programs. The following 

table shows other blight programs that state HFAs are involved with:
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TABLE 2

a Community Development Block Grant. b Neighborhood Stabilization Program.

Source: SIGTARP-prepared table based on the responses received from state HFAs.

STATE HFAS’ HHF AND NON-HHF BLIGHT ELIMINATION PROGRAM PARTICIPATION

State HHF Program

Non-HHF 

Program 1

Non-HHF 

Program 2

Non-HHF 

Program 3

Michigan Blight 

Elimination Program

HUD CDBGa-Blight 

Elimination for NonEntitled Local Units 

of Government

Michigan Attorney 

General-Blight 

Elimination Grants

HUD NSPb 2 

Program

S.C. Neighborhood

Initiative Program HUD NSP 1 HUD NSP 3 --

Illinois Blight Reduction

Program

Illinois-Abandoned 

Property Program -- --

Ohio Neighborhood

Initiative Program

Ohio Attorney 

General-Moving 

Ohio Forward

-- --

Indiana Blight 

Elimination Program -- -- --

Alabama Blight 

Elimination Program -- -- --

As of December 31, 2014, the latest data available, only two state HFAs, 

Michigan and Ohio, had reported to Treasury that properties had been 

demolished. Specifically, Michigan’s HFA reported that it had spent $22,795,284 

in HHF funds to remove or demolish 1,887 properties. When averaged, this 

comes to a spend rate of $12,080 per property. A spend rate may be different than 

the actual cost. Michigan’s HFA reported to Treasury that the median assistance 

spent on acquisition of properties is zero, the median assistance spent on 

demolition is $9,440, and the median assistance spent on greening is $1,250. 

Ohio’s HFA reported to Treasury that it had spent $4,833,691 to remove or 

demolish 428 properties under the HHF Blight Elimination Program, which 

covers only 1-4 unit residential and, according to an Ohio HFA official, mixeduse properties. This comes to an average spend rate of $11,293 per property. 

Ohio’s HFA reported to Treasury that the median assistance spent on acquisition 

of properties is $0 and the median assistance spent on demolition is $8,195.

5 

As of December 31, 2014, the latest data available, the four remaining states have 

not reported any demolitions to Treasury. However, this information will be 

outdated because Treasury requires reporting on a lagged basis to give state HFAs 

time to compile these reports. For example, Indiana’s HFA told SIGTARP that 

the state has approximately 50 demolitions. 

 5 Ohio’s median assistance spent on demolition includes greening costs.
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The HHF Blight Elimination Program Is Designed 

in a Way that Leaves Treasury in the Dark on 

Strategies, Decisions, and Blight Elimination 

Activity Under HHF and Paid for With TARP 

Dollars

SIGTARP found that the Hardest Hit Fund Blight Elimination Program is

designed in a way that leaves Treasury in the dark on strategies, decisions, and 

blight elimination activity conducted under HHF and paid for with TARP dollars. 

Treasury’s contracts with the six participating state HFAs specifically 

contemplate that the state HFAs will administer blight elimination under HHF 

with partners. For example, Treasury’s contract with Michigan states:

Program Overview: Strategically target residential and 

multifamily demolition in designated areas within the state of 

Michigan, by partnering with land banks, non-profit and/or forprofit organizations (together, “Partners”).

Each state HFA can have many of these partners depending on, for example, how 

many cities and counties receive a portion of the HHF funding for blight 

elimination. For example, Ohio’s HFA has 21 partners for HHF blight 

elimination, all of which are land banks. A land bank does not have to be a 

governmental entity. Bigger cities or counties may have more than one 

participating partner.

Treasury does not know the identities of the city or 

county/land bank/non-profit/for-profit partners that are making key

decisions on blight elimination and will receive TARP dollars 

Treasury could not identify for SIGTARP all of the land bank and program 

partners for each of the six states that will participate in HHF blight elimination 

activity. When SIGTARP asked Treasury to provide a listing of all program 

partners in the HHF Blight Elimination Program, Treasury responded that it did 

not maintain the information. Instead, a Treasury official told SIGTARP that 

each HFA may work and contract with servicers, non-profit organizations, 

contractors and other vendors, that Treasury is not a party to those contracts, and 

that the HFAs are in the best position to provide a list of their partners in any of 

their programs. Treasury’s contracts with the six states contemplate that these 

partners will be key participants and receive TARP funding. Treasury does not 

conduct oversight over these partners, given that it does not know their identities.
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Treasury’s HHF Blight Elimination Program puts most of the 

decision making in the hands of city or county land banks, non-profit 

organizations, and in some instances for-profit organizations whose 

identities are unknown to Treasury

Treasury has allowed the state HFAs to place much of the decision making and 

the actual blight elimination activities in the hands of the city or county land 

banks, non-profit organizations, or in some cases, for-profit organizations6 that 

are considered to be “partners” under Treasury’s contract.7

 For example, 

Treasury’s contract with Michigan’s HFA states that the HFA will determine 

project sites in direct consultation with partners. Treasury’s contract with 

Michigan’s HFA provides: 

Structure of Assistance: Partners will be responsible for property 

acquisition (if applicable), demolition work and on-going property 

maintenance. 

Partners will submit to [the state HFA] the following for each 

demolition candidate: 

 property ownership and/or acquisition costs; 

 pre demolition inspection with photos and post demolition inspection 

with photos, third party environmental demolition inspection 

(including asbestos information), report providing proof of completion

 Any other miscellaneous information identified on property to include 

hazards, adverse findings, etc. 

One state HFA official told SIGTARP that the detail on the selection of properties 

for demolition is driven from that city or county/land bank/non-profit/for-profit 

partner based on their strategic plan. 

SIGTARP found that the city or county/land bank/non-profit/for-profit partners, 

not the state HFAs that contract with Treasury, make the following decisions 

under HHF: 

 selection of neighborhoods for demolition;

 selection of how much of the vacant residential properties in those 

neighborhoods should be demolished; 

 selection of the specific properties to be demolished;

 determination of applicable Federal and state laws and regulations; 

 6 While Treasury’s contract with Michigan states that a partner can be a non-profit or for-profit organization, Treasury’s 

contract with Ohio states that a partner can only be a land bank. 7 Treasury’s Blight Elimination Program represents a significant shift by Treasury in who makes decisions under HHF. 

Previously, state HFAs determined which homeowners would receive HHF assistance and paid that TARP assistance 

to the homeowners’ mortgage servicer.
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 whether to conduct environmental studies and determining the presence of any 

asbestos; 

 selection of engineering firms and asbestos-removal contractors necessary to comply 

with applicable laws and regulations, and contracting with those firms;

 selection of demolition contractors, greening contractors, maintenance contractors, 

and contracting with those vendors; and

 completion of the work as required under the contract.

Treasury does not know the outcome of these decisions. Treasury does not know 

the important blight elimination strategies and decisions being employed by city 

or county/land bank/non-profit/for-profit partners. Treasury does not require the 

state HFAs to report meaningful data on the identity of the partners, their 

subcontractors, and the blight elimination activities being paid for with TARP 

dollars. According to an Indiana official, they are not currently sharing any 

contracting information with Treasury. The Indiana official told SIGTARP: 

“Again, if – when Treasury asks for that, we will provide it.” 

SIGTARP found that Treasury’s HHF Blight Elimination Program is 

designed for state HFAs to pay TARP dollars to partners including 

city or county land banks, non-profit organizations, and in some 

instances for-profit organizations, whose identities are unknown to 

Treasury, for HHF blight elimination activities

Treasury’s contracts with state HFAs specifically contemplate the payment of 

TARP funds to the city or county/land bank/non-profit/for-profit partners for HHF 

blight elimination activities. For example, Treasury’s contract with Michigan 

provides that upon receipt of documentation, the state HFA “will provide Hardest 

Hit funding to Partner ....Total assistance will provide for payoff of any existing 

lien (if applicable), demolition costs, a $500 one-time project management fee, 

and $750 maintenance fee to cover maintenance of property.” The city or 

county/land bank/non-profit/for-profit partner would then use these TARP funds 

to pay contractors for the demolition activities. 

SIGTARP found that TARP’s HHF Blight Elimination Program allows for 

Federal bailout dollars to be funneled for payments through multiple layers of 

recipients whose identities also are unknown to Treasury. Because of these layerupon-layer transactions, some of which are not public and are not maintained in 

one place, or by Treasury, it is difficult to follow the flow of TARP dollars. 

However, to illustrate the flow of TARP funds through different layers for HHF 

blight elimination activity, SIGTARP created the following chart:
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SIGTARP 15-001 April 21, 2015

FIGURE 1

OHIO HHF BLIGHT ELIMINATION PROGRAM

Source: SIGTARP-prepared chart based on interviews with and documentation provided by the Ohio HFA.
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Treasury has very limited knowledge and is not keeping itself 

informed or gaining insight of critical activities taking place under 

HHF blight elimination being paid for with TARP dollars

Treasury does not know the strategies and decisions being made by the city or 

county/land bank/non-profit/for-profit partners on how to execute blight 

elimination under HHF. Treasury does not know the strategies being employed 

by the city or county/land bank/non-profit/for-profit partners to conduct HHF 

blight elimination activity such as demolition and greening. Treasury does not 

know the neighborhoods selected by the city or county/land bank/non-profit/forprofit partner for HHF blight elimination or the strategy behind the selection of 

the neighborhoods. Treasury does not know the strategy of how many homes 

should be demolished in each neighborhood. Treasury does not know the 

properties selected for HHF demolition or the strategy behind that selection. 

Treasury does not get involved in, or have knowledge of, the selection or approval 

of properties before or after they are demolished. Treasury does not know the 

addresses or zip codes of demolitions under HHF. Treasury has very few 

reporting requirements for state HFAs and no reporting requirements for the city 

or county/land bank/non-profit/for-profit partner. Treasury requires very little 

reporting on demolition activity, only requiring states to report the number of 

properties demolished; the number scheduled waiting to be demolished; the 

number of applications for demolition; the aggregate dollars spent; and median 

cost of property acquisition, demolition, and greening.

Treasury is not keeping itself informed or monitoring critical HHF blight 

elimination activities by the city or county/land bank/non-profit/for-profit partners

being paid for with TARP dollars. Treasury does not require a detailed 

accounting on how the TARP funds are spent on blight elimination. Treasury 

does not know the aggregate number or dollar value of demolition, greening, or 

other awarded contracts and subcontracts under HHF for blight elimination. 

Treasury does not know the details of those contracts or subcontracts or even the 

recipients. SIGTARP found that Treasury does not collect, maintain, or review 

the contracts for demolition, greening, and maintenance. Treasury’s HHF 

Program Director told SIGTARP that contract awards are “the state’s business.” 

However, officials from the two state HFAs that have reported to Treasury that 

they have started demolitions under HHF (Michigan and Ohio) told SIGTARP 

that they do not collect the contracts and subcontracts. An official from Ohio’s 

HFA told SIGTARP that the Ohio HFA “does not collect all documentation 

pertaining to current and future contracts for the local land banks. We require 

thorough support documentation, including invoices and proof of payment, for all 

expenses that are reimbursed with HHF funds.” In another example, the 

Michigan HFA told SIGTARP that it does not monitor or approve the contracts or 
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even have a listing of the contractors that their land banks/other partners have 

entered into with external entities.

In other words, Treasury does not have or monitor the contracts and subcontracts 

for blight elimination activity for which TARP funds are the source of payment, 

and neither do the states. Treasury and state HFA officials told SIGTARP that 

would require going to each individual partner to obtain the listing of contracts 

and subcontracts. However, Treasury and the state HFAs do not do that. 

Greater knowledge and insight by Treasury of the participants, 

strategies, decisions, blight elimination activities, and expenditures in 

HHF blight elimination activities do not take away a state’s ability to 

tailor local solutions – the opposite is true

Unlike other blight elimination dollars these states may receive, TARP funds 

provided by Treasury are not grant funds, and this is not a grant program. Greater 

knowledge and insight by Treasury of the participants in HHF demolition 

activities, strategies, and decisions, blight elimination activity, and expenditures 

do not take away a state’s ability to tailor local solutions. The opposite is true. 

Treasury’s role as a steward of TARP is more than about money. These states 

that are still struggling from the crisis need Treasury’s involvement and full 

support.

These states are already used to providing a detailed accounting and other 

information on their partners and expenditures related to blight elimination 

activity. For example, Michigan’s HFA is required to provide the state legislature 

with quarterly reporting on demolition projects including, at a minimum, a 

description of the project areas selected and a complete accounting of all 

expenditures. Michigan’s HFA’s quarterly reporting to the state provides an 

aggregate accounting as well as identifies every partner (land bank and others), 

the award amount, and the status of the contract, whether work was initiated, and 

how much had been invoiced. Michigan’s HFA’s quarterly reporting to the state 

identifies the neighborhoods selected for blight elimination and provides detailed 

maps of those neighborhoods identifying properties demolished. In a 

November 27, 2013 report, Michigan Land Bank informed the state legislature 

that HHF demolitions would be scheduled in the same neighborhoods as a state 

blight elimination program. In addition, some of the land banks are putting 

property addresses of all properties demolished under HHF on their website. If 

there is no harm in the public seeing them, then there is no harm in Treasury 

seeing them.
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Treasury Takes a Hands-Off Approach to the 

HHF Blight Elimination Program and Has Very 

Limited Involvement in the Planning or Execution 

of the Program 

SIGTARP found that Treasury takes a hands-off approach to the HHF Blight 

Elimination Program and has very limited involvement in the planning or 

execution of the program. Treasury has not conducted comprehensive planning 

that could ensure the success of blight elimination under HHF, ensure that TARP 

funds are spent in the most effective manner, and protect HHF against the risk of 

fraud, waste, and abuse. 

Treasury has not set target outcomes that it wants to achieve with HHF to meet 

the TARP goals, instead deferring to each state HFA to set the target outcome. In 

April 2012, SIGTARP reported that Treasury’s goals and metrics for the HHF 

program fall short of those used in best practices and make effective program 

evaluation and oversight difficult. HHF is a program that has faced difficulties in 

reaching the intended number of homeowners. SIGTARP reported in April 2012 

that HHF has experienced significant delays in providing help to homeowners due 

to several factors, including a lack of comprehensive planning by Treasury and a 

delay in participation by large mortgage servicers, and Fannie Mae and Freddie 

Mac, resulting in HHF helping only 30,640 homeowners after two years.

Treasury rejected SIGTARP’s 2012 recommendations that Treasury set 

measurable program goals (target outcomes), measure progress against those 

goals, and make changes needed to the program to reach those goals.

Homeowners have suffered from Treasury’s rejection of SIGTARP’s 

recommendations to set target outcomes, measure progress and work to reach 

those outcomes. Treasury required participating HHF states to estimate the 

number of homeowners to be helped by HHF in each state, but did not set a target 

outcome of how many homeowners Treasury wanted to help. As a result, there is 

no baseline by which to measure progress. A lack of a baseline does not allow 

Treasury to escape accountability. With Treasury not setting a target outcome, 

such as the aggregate number of homeowners Treasury wants to help with HHF, 

the 19 jurisdictions have collectively reduced by nearly half (44%) the number of 

homeowners estimated to be helped with HHF (from 546,562 homeowners in 

2011 to 303,386 homeowners, as of September 30, 2014).

Treasury has lost opportunities in HHF that began with its failure to set a target 

outcome for the program. Treasury is responsible for HHF not helping as many 

people as Treasury had expected. If Treasury had worked with each state to set a 

realistic target outcome of the number of homeowners to be helped in each state, 
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and rolled the number of homeowners into a Treasury target, Treasury could have 

measured against the target and gained better insight into which states were not 

meeting their portion of the target. This insight could have shown Treasury which 

states needed Treasury’s help and resources, or where improvements could have 

been made. 

Treasury is continuing on its same path for the HHF Blight Elimination Program. 

Treasury has not conducted comprehensive planning that could 

ensure the success of the program, that TARP funds are spent in the 

most effective manner and are protected against the risk of fraud, 

waste, and abuse

SIGTARP found that Treasury has not engaged in comprehensive planning for 

HHF blight elimination that could ensure the success of the program, ensure that 

TARP funds are spent in the most effective manner, and protect HHF against the 

risk of fraud, waste, and abuse. Treasury has left much of the planning to the 

state HFAs, which in turn have left much of the planning to the city or 

county/land bank/non-profit/for-profit partners. Treasury’s only goals are the 

high-level goals to stabilize neighborhoods and decrease foreclosures, which tie to 

the goals in the TARP law. However, Treasury has not established what it 

expects to see from HHF’s Blight Elimination Program to ensure that the program 

reaches those high-level goals.

SIGTARP recognizes the challenge of using a Federal program to offer local 

solutions administered by state agencies and Treasury’s desire to give states 

flexibility because the states know best about their problems. However, 

flexibility should not mean free rein. Comprehensive planning to ensure that 

Federal interests and state interests align can mitigate this challenge. The first 

part of mitigating this challenge is for Treasury to identify its Federal interests to 

the states in the form of Treasury-defined target outcomes, rather than let the 

states or anyone else determine the desired outcome for a TARP program. 
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Treasury has not set target outcomes that it wants the HHF Blight 

Elimination Program to achieve in order for Treasury to ensure that it 

will meet the high-level goals of stabilized neighborhoods and 

decreased foreclosures, instead deferring to each individual state to 

set the target outcome

SIGTARP found that Treasury has not set target outcomes that it wants the HHF 

Blight Elimination Program to achieve in order for Treasury to ensure that it will 

meet the high-level goals of stabilized neighborhoods and decreased foreclosures, 

instead deferring to each state HFA to set the target outcome. Treasury needs to 

determine the target outcomes it wants to achieve with the HHF Blight 

Elimination Program to ensure that the program results in stabilized 

neighborhoods and decreased foreclosures; however, Treasury has not done that. 

Treasury’s HHF Program Director told SIGTARP that Treasury left it up to the 

states to tell Treasury what the states would point to as showing that TARP funds 

went to stabilize neighborhoods and decrease foreclosures. Treasury’s HHF 

Program Director told SIGTARP that it is incumbent on the states “to develop 

their own means or metrics that will point to success of the program.” Treasury 

asking states to measure progress toward success is not the same thing as asking 

states to define success. 

SIGTARP found that the HHF Blight Elimination Program is designed so that the 

city or county/land bank/non-profit/for-profit partners are responsible for defining 

the target outcome and measuring their own progress towards that outcome. 

Treasury’s contracts with several states on blight specifically reference the states 

will develop performance indicators in connection with the city or county level 

partners.8 Performance indicators measuring progress are not the same thing as 

defining what targeted outcome is necessary to ensure that the HHF Blight 

Elimination Program successfully achieves stabilized home prices and decreased 

foreclosures. Treasury is relying on the states to set target outcomes. However, 

the state HFAs that SIGTARP interviewed are not actually setting target 

outcomes, but instead deferring to the city or county/land bank/non-profit/forprofit partners. For example, two state HFAs told SIGTARP that they do not

have target outcomes, but are deferring to the city or county land banks. 

Flexibility of states to offer locally tailored solutions should not mean that states 

or city or county/land bank/non-profit/for-profit partners set the target outcome of 

a Federal TARP program. It is one thing to have the states and the city or county 

land banks or other partners measure their own success against Treasury’s target 

outcome, but states, cities, and counties should not define what level of success 

is expected for a TARP program to achieve the high-level TARP goals. That is 

 8 While the Ohio contract excludes working with partners to develop performance indicators, an official told SIGTARP 

the Ohio HFA expects to develop indicators at a later time.
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Treasury’s responsibility under TARP law and as the Federal department 

administering TARP. If Treasury does not set a target outcome for HHF blight 

elimination, it is leaving the success of a TARP program to chance. This leads to 

a lack of accountability at the city or county level, state level, and Treasury level. 

Treasury-defined target outcomes that Treasury expects to achieve 

do not take away the flexibility of states, but instead give insight for 

Treasury and the states into whether improvements can be made 

to make the HHF Blight Elimination Program more effective as the 

program progresses 

With only three states underway with demolition, and two of those states having 

just started, Treasury has an opportunity right now to increase the effectiveness of 

the program by setting target outcomes that will give it and each state insight into 

whether the HHF Blight Elimination Program in each state is on track for success 

and whether improvements can be made to make the program more effective as 

the program progresses. However, that opportunity will diminish with time, given 

the fast pace of demolition activity.9

 If Treasury sets target outcomes now, 

Treasury and the states would then have something to measure progress against to 

determine if each state is on track. 

Treasury’s desire for the states to have flexibility should not prevent Treasury 

from doing all that it can to help these states ensure that HHF demolition 

successfully stabilizes neighborhoods and decreases foreclosures. Treasury 

establishing target outcomes does not take away a state’s flexibility to tailor a 

local solution as is Treasury’s desire with HHF, but helps states find areas where 

local objectives are aligned with the goals of TARP.

State HFA officials from Michigan and Ohio told SIGTARP that the only goal 

Treasury has given them is to have the HHF blight money spent by 

December 31, 2017. Spending the available TARP money should not be 

Treasury’s end goal. 

This type of comprehensive planning is not new to Treasury and is a recognized 

best practice for the Federal Government that does not harm a state’s ability to 

tailor local solutions that are aligned with Treasury’s target outcomes. Without 

knowing the target outcomes Treasury wants to achieve beyond spending the 

money allocated for blight elimination, the states and the city or county land 

banks or other partners make decisions based on information they have from the 

state or local interests that have been articulated in their strategic plans. For 

example, Indiana is the only state in which Treasury included increasing 

 9 For example, in the second quarter of 2014, Michigan reported cumulative demolitions of 315 properties, which had 

increased to 816 the next quarter, and further increased to 1,887 the following quarter.
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neighborhood safety as one of its high-level program goals along with stabilizing 

neighborhoods and decreasing foreclosure in its contract. However, Michigan is 

using HHF for the high-level policy goal of increasing neighborhood safety. 

Michigan’s HFA also conducts blight elimination activities using $25 million

from an Attorney General settlement with mortgage servicers. Under this state

blight program called the Neighborhood Stabilization School Anchor Initiative, 

and a Pathways to Potential Program, the state has articulated its interests “to 

make students and families stronger and safer by making the surrounding 

neighborhood safer, reducing truancy, and offering better and more integrated 

services.” Michigan Land Bank states that this program’s goal is to provide safer 

routes to and from school for children. With that state interest in mind, 

Michigan’s HFA identified properties to be demolished focusing on 

neighborhoods surrounding specific schools. On August 28, 2013, Michigan

Land Bank reported to its state legislature that it would use Federal HHF funds to 

demolish properties in the same neighborhoods by schools selected in the state 

program. Given that Treasury has not defined Federal interests and targeted 

outcomes specific to blight elimination, the Michigan HFA appears to have used 

the state’s interest of protecting student safety in selecting neighborhoods for 

HHF demolition. But demolition in these neighborhoods may or may not 

decrease foreclosures at an expected level because that is not the primary goal. 

Knowing the target outcomes that Treasury is trying to achieve provides a 

framework for states and cities or counties to make choices that are locally 

tailored, and are also consistent with Federal objectives.

Treasury could use its resources and expertise on economic 

outcomes in consultation with each state to set Treasury-defined 

target outcomes that are realistic for that state

Treasury could use its own resources and expertise on economic outcomes in 

consultation with each of the six participating states to help Treasury set target 

outcomes that are realistic for that state. Some potential target outcomes that 

Treasury could set using its own expertise and resources and after consulting with 

states to gain insight as to whether HHF blight elimination is on track for success 

in each city or county or whether improvements could be made are: 

 target level of decrease in foreclosures overall for cities and states;

 target decrease in vacancy rates in targeted neighborhoods, cities, and states;

 target level of increases in home values in targeted neighborhoods, cities, 

and states;
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 target reduction in the percentage of properties with negative equity in 

targeted neighborhoods, cities, and states; and 

 target reduction in crime rates in targeted neighborhoods, cities, and states.10 

Treasury cannot assume that any amount of demolition of vacant properties in any 

area of the city or county will result in stabilized home prices and decreased 

foreclosures. For example, prior to agreeing to allow Michigan to use HHF funds 

for blight elimination, Treasury’s Economic Policy group conducted an economic 

analysis to estimate the stabilization of home prices and decrease in foreclosures 

that would come from demolitions in the City of Detroit, and that analysis 

assumed that the impact would only be felt within a 200-foot radius of the 

demolished property. Additionally, the Government Accountability Office 

reported that officials in Las Vegas, Nevada, and the surrounding areas told GAO 

that they were able to acquire a few hundred properties with HUD grant funds for 

blight elimination, as of June 2011, but that this number was not enough to 

stabilize the neighborhood.11 

Without establishing target outcomes for each state (in consultation with each 

state), Treasury will not be able to determine which states need Treasury’s help or 

additional oversight to ensure that the HHF Blight Elimination Program is on 

track for success. Even if some of these six state HFAs have experience with 

blight elimination, and local expertise, they do not have the level of expertise and 

resources of Treasury on economic outcomes. Officials from the three state 

HFAs told SIGTARP that they do not have an economic analysis to serve as a 

baseline by which they make demolition decisions. For example, a Michigan 

HFA official told SIGTARP that HFA officials have not conducted an economic 

analysis. Michigan’s HFA also told SIGTARP that Treasury has not shared its 

economic analysis on the impact of demolitions in Detroit with Michigan’s HFA. 

This is a perfect example of where Treasury could use its significant resources 

and expertise in consultation with those states to ensure the success of the 

program. 

If Treasury, through its Economic Policy group, can conduct an economic 

analysis to determine the target outcome of HHF demolition for one city, it can 

conduct them for others. Treasury could combine its expertise and resources with 

the states to conduct economic analyses that lead to Treasury setting realistic 

target outcomes that the states can work toward achieving.

 10 Treasury may have other targeted outcomes it wants to achieve such as a certain number of contracts awarded with 

best value or low cost, timeliness of the demolition and greening work, demolition in low-income or middle-income 

neighborhoods, demolition in neighborhoods with senior citizens, and demolition in certain areas with high crime or 

drug rates. 11 See GAO audit report (GAO-12-34), “Vacant Properties: Growing Number Increases Communities’ Costs and 

Challenges,” issued November 2011. 
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The economic analysis that Treasury already conducted for Detroit provides a 

baseline for Treasury to develop its target outcome. An initial analysis, such as an 

economic analysis, used in making investment decisions helps identify the 

possible outcomes to success as well as helps to establish baseline information for 

measuring success. Treasury’s Economic Policy group’s analysis stated that 

Treasury could find no academic research that links the prevalence of vacant 

properties directly to changes in the foreclosure probabilities of nearby properties. 

Treasury determined that the price impact of blight reduction affects homes 

within an approximate 200-foot radius of the property. Treasury estimated that 

demolishing a vacant house and greening the lot in Detroit would lower the 

default probability of nearby properties by between 0.7 and 1.7 percentage points 

on average with likely impact on foreclosure rates toward the 1.7 percentage point 

end. 

Just as it did for Detroit, Treasury could estimate a decrease in foreclosure rates 

that it expects to see in each city or county with the HHF Blight Elimination 

Program and use that to set its target outcome. Treasury can do that through its 

Economic Policy group as it did with Detroit or by combining the resources and 

expertise of Treasury’s team with the local knowledge of the state HFAs and the 

city or county/land bank/non-profit/for-profit partners that are developing the 

strategies in HHF blight elimination.

A Treasury-defined target outcome would give Treasury and the states immediate 

and ongoing insight into ways to improve the effectiveness of HHF blight 

elimination as the program progresses. One example might be that if Treasury’s 

overarching goal is to stabilize home prices in an effort to halt foreclosures, then 

one baseline Federal goal could be that home prices are stabilized within a 200-

foot radius of each blighted property. Officials from three state HFAs told 

SIGTARP that they were not aware of Treasury’s economic analysis. Therefore, 

all six states participating in HHF blight elimination may not know about 

Treasury’s assumption of the 200-foot radius progress on home prices. The city 

or county land banks determine the strategies of which neighborhoods they hope 

to impact. However, they may be picking homes for demolition in that 

neighborhood that are outside or on the edge of the 200-foot radius, which may 

not be as effective on stabilizing home prices and decreasing foreclosures as other 

homes.

An economic analysis that establishes target outcomes also helps Treasury make 

investment decisions. Treasury’s economic analysis that it conducted prior to 

making the decision to allocate HHF funds for blight elimination determined that 

demolishing a vacant home and greening the lot in Detroit would lower the 

default probability of nearby properties by between 0.7 and 1.7 percentage points

on average. If Treasury has a target reduction of foreclosure or increased home 

values, and shared that with the states, the states could select properties for 
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demolition that may be more likely to meet that target and also further local 

objectives. Sharing the analysis with Michigan could change the way Michigan 

selects locations. As of December 31, 2014, Michigan has demolished 1,887

properties and it is not known to what extent these properties fall within or outside 

this 200-foot radius; and Treasury may have missed an opportunity to ensure 

program success.

Neither Treasury nor the state HFAs have developed performance 

indicators or are measuring the impact of demolition, which 

decreases Treasury’s ability to see areas for improvement to ensure 

effective use of TARP dollars and success in TARP goals

SIGTARP found that neither Treasury nor the state HFAs have developed 

performance indicators to measure whether the strategies, decisions, and activities 

under HHF blight elimination will result in stabilized neighborhoods and 

decreased foreclosures. Treasury’s HHF Program Director told SIGTARP that if 

Treasury is seeing things within HHF numbers that are presented to Treasury that 

look like they are not where Treasury would like them to be, Treasury would 

reach out to the states. With blight elimination, Treasury is only requiring limited 

reporting on the number of properties demolished, and the median cost, so it is 

unclear in that context where Treasury would like the states to be. A Treasurydefined target outcome means that states do not have to guess where Treasury 

would like them to be.

Treasury’s contracts provide that the state HFAs will develop performance 

indicators and measure progress; however, states are deferring to city or 

county/land bank/non-profit/for-profit partners. While Treasury’s contracts with 

states say: “[the state housing finance authority] will work with program partners 

to identify meaningful indicators that will enable them to track and quantify the 

Blight Elimination Program’s impact in the designated communities,” state HFAs 

are deferring to city or county/land bank/non-profit/for-profit partners to set

performance indicators.

12 A Michigan HFA official told SIGTARP that “lenders 

in the community have their specific targets.”

The states should develop performance indicators at the start of the program so 

that performance can be measured as the program progresses, but that has not 

happened. Michigan, Ohio, and Indiana HFA officials told SIGTARP that the 

program is too new to identify metrics and performance indicators to measure 

program effectiveness. For example, one state HFA official told SIGTARP that 

“it is something that we are set up to do once we’re further into the program.”

 12 While the Ohio contract excludes working with partners to develop performance indicators, an official told SIGTARP

the Ohio HFA expects to develop indicators at a later time.
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Officials from Treasury and state HFAs told SIGTARP that impact cannot be 

measured for a long time, possibly until after the program closes. A Michigan 

HFA official told SIGTARP that measurement of the impact would be conducted 

post program.

Treasury is aware that the states have not established performance indicators and 

are not measuring progress of the impact of HHF blight elimination activities. 

Treasury does not require that state HFAs currently report on progress toward 

target outcomes or even Treasury’s high-level goal of stabilizing neighborhoods 

and decreasing foreclosures. The current state HFA quarterly reporting does not 

provide insight as to whether the properties selected for demolition are within a 

radius, range, or zip code of homeowners struggling to preserve their homes and, 

therefore, will reduce the likelihood of foreclosures. Treasury does not require 

state HFAs to report on the number of foreclosures or neighborhood stabilization 

information.

Treasury does not know when it would require states to develop performance 

indicators or report on those performance indicators. A Treasury official told 

SIGTARP that the states will design their own reports to Treasury and will not 

provide those to Treasury “until the program is further seasoned.” When asked at 

what point Treasury will consider the program “seasoned,” Treasury’s HHF 

Program Director told SIGTARP that Treasury would have to work with the state 

on that. Treasury’s HHF Program Director told SIGTARP that she did not know 

in the time that Treasury’s HHF program was around that Treasury would see 

increases in property values. If this is a target outcome that Treasury considers 

important, then it should make that apparent to the states and set a target for the 

increase. 

While certain indicators of the impact of HHF blight elimination (in combination 

with other factors) may take time to measure the progress, others do not. For 

example, if Treasury set a target decrease in foreclosures, two performance 

indicators that could measure progress could be a specified decrease in mortgage 

defaults and foreclosure filings in each targeted city or county where HHF blight 

elimination is conducted, aggregated by state. Without Treasury establishing a 

target outcome, it is not clear whether Treasury would claim that any decrease in 

the state foreclosure filings means that blight elimination was successful, even if 

there were no decreases in the default rate or foreclosure filings of cities or 

counties that had HHF demolition. A zero or very low decrease in the default rate 

of foreclosure filings of cities or counties that had HHF demolition might indicate 

that the strategies used by the city or county/land bank/non-profit/for-profit 

partners in choosing properties or neighborhoods may not be as effective as they 

should be. 
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In addition, home values are measured by other entities on an interim basis such 

as by local tax authorities that assess home values on an annual basis. If Treasury 

set a target increase in home value, states could set performance indicators 

including measuring the price of home sales on an ongoing basis, measuring 

home values as determined by local tax authorities annually, and by measuring 

the number of short sales. No improvement in these indicators within a set period 

of time might indicate that the strategies used by the city or county/land 

bank/non-profit/for-profit partners in choosing properties or neighborhoods may 

not be as effective as they should be.

Tracking the impact of HHF blight elimination on a periodic basis would allow 

Treasury and the state HFAs to give guidance to the city and county land banks 

that could allow for a greater economic impact. By keeping itself in the dark, and 

having little involvement in strategic decisions on blight elimination, Treasury 

misses an opportunity to help states and cities or counties develop a strategy that 

has the most effective use of HHF dollars and the best chance for success. 

Treasury is also missing an opportunity as it oversees blight elimination in all six 

states to provide guidance on best practices or lessons learned to ensure the most 

effective use of HHF for blight elimination. Instead, Treasury appears to leave 

sharing of information to the states themselves. State HFAs are trying to talk to 

each other. Treasury’s principal role is to review the state’s proposal. After 

agreeing to a two- to three-page term sheet with limited requirements, Treasury 

listens in on calls set up by the states. Treasury should not be reactive and wait as 

a resource. Treasury should be proactive in providing this program and each state 

all of its resources. Treasury issuing guidance including best practices would not 

take away a state’s ability to create locally tailored approaches. A GAO report 

stated that HUD helps local officials adjust their strategy so that grant spending 

on blight elimination would be used in the most effective manner.13 HUD also 

provides guidance on contracting. Treasury should be doing even more than 

HUD because HHF is not a grant program. 

SIGTARP found that the HHF Blight Elimination Program is designed so that the 

city or county/land bank/non-profit/for-profit partners are responsible for 

measuring progress. In other words, Treasury is allowing the city and county land 

banks to measure their own success. As currently envisioned, that may not be 

until the program ends. In addition to concerns over how this leads to a lack of 

accountability at a Federal, state, and local level, without that measurement, 

 13 GAO issued a report (GAO-12-34) in November 2011, “Vacant Properties: Growing Number Increases Communities’ 

Costs and Challenges,” in which it stated that officials in two localities reported that the technical assistance they 

received from HUD helped fill gaps in their capacity to develop systems to implement Neighborhood Stabilization 

Program (“NSP”) projects. GAO reported that a HUD official explained how the agency’s technical assistance has 

helped local officials analyze their local markets and adjust their strategies for spending NSP funds on programs that 

would be most effective. HUD also revised its NSP technical assistance efforts to target spending better to 

communities that need it the most and developed Web-based resources for all NSP grantees.
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Treasury could lose opportunities to ensure the success of the program through 

improvements. 

Although Treasury should have developed its target outcomes at the beginning of 

the program in 2013, it is not too late for Treasury to do so now, particularly as 

only three of the six states have started demolishing properties. It is also not too 

early for states to develop performance indicators.
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Treasury Has Not Taken a Risk-Based Approach 

To Identify and Mitigate Risks that Could Form 

Barriers to the Most Effective Use of TARP Funds 

for Demolition Activity or Could Lead to Fraud, 

Waste, and Abuse

The design of the HHF Blight Elimination Program that places much of the 

control and decision making in the hands of city or county land banks and other 

partners far removed from Treasury, which conduct work through contractors 

removed even farther from Treasury, produces certain risks that Treasury should 

assess and mitigate through comprehensive planning. 

Treasury’s oversight is impacted by state HFAs being in the dark on 

Blight Elimination Program activities being conducted by their 

land banks and other partners 

SIGTARP found that Treasury’s ability to conduct oversight of TARP’s HHF 

Blight Elimination Program could be directly impacted by Treasury’s and the 

state HFAs’ lack of knowledge of the program executed by their land banks and 

other partners. Treasury’s hands-off approach and design of the HHF Blight 

Elimination Program, which allow the state HFAs to put much of the 

decision making and actual blight elimination activities in the hands of external 

partners, necessitate that HFAs have an effective system of internal control to 

minimize the risk of fraud, mitigate conflicts of interest, maximize operational 

efficiency and effectiveness, and ensure effective delivery of services. This is 

especially true given the layer-upon-layer transactions involved with executing 

the HHF blight elimination activities and Treasury’s lack of knowledge and 

involvement over these activities. 

Not only does Treasury not collect all of the contracts for blight elimination 

activities under HHF, officials from the two state HFAs that have reported to 

Treasury that they have started demolition under HHF (Michigan and Ohio) told 

SIGTARP that they do not collect the contracts, either. Michigan’s HFA does not 

monitor the contracts that the land banks or other partners have for blight 

elimination activities under HHF or even has a listing of the contractors.

In addition, costs associated with demolition projects vary depending upon the 

scope of work necessary for successful acquisition, demolition, and disposition of 

eligible sites. For example, the Ohio HFA Compliance and Neighborhood 

Initiative Program Manager told SIGTARP that each demolition project is “likely 

to involve dozens of organizations including municipal subdivisions, sellers, 
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closing agents, title searchers, structural inspectors, trash collectors, 

environmental inspectors, asbestos abatement workers, demolition contractors, 

site surveyors, landscapers, groundskeepers, maintenance workers, and 

administrative support services.” The HFAs approve reimbursement for the 

delivery of these services based on invoices and receipts and other documentation 

that have been passed on to them by their land banks and other partners through 

their external partners. This pass-through arrangement increases the importance 

of the HFAs having the contracts on hand when approving invoices and receipts 

for the delivery of demolition services under the HHF program. 

State HFAs must make necessary adjustments to their existing HHF oversight and 

internal controls, as required under their contracts with Treasury, to ensure TARP 

funds are used as intended. By not collecting the subcontracts being paid for with 

TARP funds, state HFAs are entirely dependent on the city or county/land 

bank/non-profit/for-profit partners’ representations. Because of the design of this 

layering of transactions, maintaining the contracts for these services at the state 

and Federal levels would reduce vulnerabilities.14 Treasury’s shift in the use of 

TARP funds under the HHF Blight Elimination Program necessitates guidance 

from Treasury to the participating six states about changes needed to their existing 

HHF oversight and internal controls in order to reduce vulnerabilities specific to 

blight elimination.

Treasury has an oversight responsibility to ensure that the state 

HFAs, and their city- or county-level partners, are ready for, and can 

handle, increases in demolition and other work contemplated under 

HHF

One of the risks that Treasury has already experienced with HHF is that the state 

HFAs did not have the resources, staffing, training, and knowledge to implement 

HHF, which led to significant delays in getting help to homeowners. Even if 

some of these six state HFAs (Alabama, Ohio, Illinois, Indiana, Michigan, and 

South Carolina) have experience with blight elimination, the TARP funds 

allocated for blight elimination will likely result in a significant increase in the 

amount of blight elimination activities these states and cities have conducted. An 

Indiana HFA official told SIGTARP that there has never been a program like this 

in Indiana.

Part of Treasury’s oversight responsibility is to ensure that these six state HFAs, 

and their city- or county-level local partners, are ready for, and can effectively 

handle, this increase. TARP funds will significantly increase the number of 

 14 Some vulnerabilities could include improper contract awards, payment for non-performance of services, inflated costs 

for services, double billing, improper performance of services such as lead or asbestos removal, use of disbarred 

contractors to perform services, and non-compliance with applicable laws including those related to the environment 

and historic preservation, among other things.
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demolition jobs that will go through the city- or county-level entity that is making 

most of the decisions and conducting the activity for which they will invoice the 

state HFAs to be paid with TARP money. While Treasury is supposed to conduct 

an assessment to see if each state HFA is ready to execute HHF, Treasury does 

not update that assessment with each new program. Treasury has not assessed 

readiness specific to blight elimination at the state or city/county level. 

Treasury should learn the identities of the city or county/land bank/non-profit/forprofit partners, and conduct oversight to ensure that they have the staffing, 

knowledge, experience, and training to handle the level of contracting and 

demolition and other blight activities required under this TARP program. HUD 

Office of Inspector General (“OIG”) has issued several reports on blight 

elimination using a HUD grant program, including risks caused by a city unable 

to handle the increase in work that came with Federal blight elimination dollars. 

In January 2014, HUD OIG issued a report finding weaknesses with the City of 

Detroit.15 HUD OIG reported that a former city official stated that the number of 

demolition jobs increased by approximately 600% after the city was awarded 

program funds. The city allocated $19.9 million of these Federal grant funds for 

blight elimination. HUD OIG reported that the former city official stated that the 

city’s Building Department was not structured, and its staff did not have the 

necessary knowledge, experience, and training to handle the increase in 

demolition jobs. It is unknown whether this same entity is involved with the 

TARP-funded demolitions; however, the problem could reside with any entity. If 

an entity (state or city/county level) cannot handle the increase in demolition jobs 

that came from HUD funding, they may not be able to handle the increase that 

comes from TARP funding. However, Treasury will not know that if it has no 

insight.

By allowing itself to be in the dark, Treasury has created a TARP 

program with very little transparency to Treasury and to the public, 

which could impact risk

By allowing itself to be in the dark, Treasury has created a program with very 

limited transparency to itself and to the public, which could impact risk. 

Although Treasury in its public statements has heralded transparency in TARP 

programs, SIGTARP found that Treasury has failed to provide adequate 

 15 HUD OIG-2014-CH-1002, “The City of Detroit, MI, Lacked Adequate Controls Over Its Neighborhood Stabilization 

Program-Funded Demolition Activities Under the Housing and Economic Recovery Act of 2008,” 1/6/2014.
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transparency to the public about the HHF Blight Elimination Program.16 

It should be no surprise, given Treasury’s lack of knowledge about even the 

identity of the city and county land banks, or involvement on the blight 

elimination paid for with TARP dollars, that there is very little transparency for 

any taxpayer to understand where and how the TARP dollars are being used for 

blight elimination. Treasury does not require transparency to itself or to the 

public on the identity of the city or county/land bank/non-profit/for-profit 

partners, which the state HFAs are partnering with for blight elimination 

activities.17 Treasury does not require transparency to itself or to the public on 

the contractors and subcontractors who are performing the blight elimination 

services, the contracts and subcontracts that the HFAs and their partners have 

awarded for these services, the dollar values of those contracts, program 

expenditures, or the properties selected for demolition. Treasury does not require 

the states to report such information, which could impact risk.

To understand the detailed status of HHF blight elimination actors and activities, 

Treasury, oversight bodies such as SIGTARP, and taxpayers would need to hunt 

through various websites to piece together information and guess at the identity of 

each of the land banks or other designated program partners. Treasury’s website 

has very limited information on blight activity. State HFA websites have 

incomplete information, without meaningful data on HHF partners, the contracts 

awarded, the properties removed, and how much is spent on these contracting 

activities. Treasury does not require the state HFAs to report this information to 

Treasury or the public. Some land banks have no website.18 The information that 

is available on land bank websites varies, with some land bank websites providing 

 16 Treasury’s website on TARP currently includes a section titled: “Home/Initiatives/Financial Stability/TARP 

Programs/Housing/Transparency,” which stresses its efforts put in place “[t]o ensure that Treasury’s housing 

programs operate in full view of the public....” Reiterating the importance of this transparency, Treasury included 

similar language in its retrospective reports on TARP. Particularly, Treasury’s Four Year Retrospective Report, 

issued in March 2013, states: “Treasury is committed to making sure that every TARP program is operating at the 

highest standards of transparency and accountability. This includes providing regular and comprehensive information 

about how TARP funds are being spent, who has received them and on what terms, and how much has been recovered 

to date.” The report included: “Treasury is equally committed to ensuring that TARP’s housing initiatives are being 

implemented to the highest level of transparency.” In that report, Treasury states: “Treasury makes available the latest 

state-by-state information from HFAs that are administering local programs under the Hardest Hit Fund. Visitors to 

Treasury’s website can also find each state’s plan, contract agreements, and their latest quarterly report.” 17 For example, the Michigan HFA and Ohio HFA websites contain a list of partners; however, for Michigan it is unclear 

whether the partners are specific to the HHF Blight Elimination Program and, for Ohio, the information is not easy to 

locate. 18 For example, the land banks for Oakland County (Pontiac) and Saginaw County do not appear to have their own 

websites.
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incomplete information on a very limited and inconsistent basis.19 Treasury, 

oversight bodies such as SIGTARP, and taxpayers should not have to engage in a 

scavenger hunt to obtain details on blight elimination under TARP. 

Greater transparency would not hurt HHF’s approach to find locally tailored 

solutions. Greater transparency to the public builds trust and empowers taxpayers 

who fund TARP programs and have a right to transparency in how those funds are 

spent. Greater transparency allows taxpayers to hold Treasury accountable for 

how Federal dollars are used and what results they achieve. Greater transparency 

is required for oversight. As a result of the lack of transparency, it is difficult for 

Treasury and taxpayers to understand details of HHF Blight Elimination Program 

decisions, strategies, and activities, making oversight difficult and impacting risk.

 19 For example, the Detroit Land Bank Authority published a current list of addresses approved and demolished in the 

City of Detroit as of February 2015; the Genesee County Land Bank (Flint) published a similar list of addresses 

approved and demolished in Flint using HHF funds. By contrast, the Kent County Land Bank (Grand Rapids) 

appeared to post no information regarding the Blight Elimination Program on its website. Additionally, none of the 

five land banks posted detailed contracting information (e.g., Requests for Proposals (“RFPs”), bidding tabulations, 

contracts granted) relating to the use of HHF funds for blight elimination. Taxpayers who knew to separately search 

the website of the state land bank, the Michigan Land Bank Fast Track Authority, could find a link to yet another 

website, mlbdemo.us, where they could find actual contract RFPs and bid tabulations for all properties demolished 

under several demolition programs, including HHF – but only for the cities of Detroit and Pontiac. Similar 

information regarding HHF Blight Elimination Program activity in the other cities was unavailable. 
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Conclusion

In order to understand the U.S. Department of the Treasury’s (“Treasury”) role 

and responsibility in the Housing Finance Agency Innovation Fund for the 

Hardest Hit Housing Markets (“Hardest Hit Fund,” or “HHF”) Blight Elimination 

Program, it is necessary to understand Treasury’s role and history under the 

Troubled Asset Relief Program (“TARP”) law and with other TARP programs. 

While stability of the nation’s financial system was the goal of TARP as initially 

proposed by Treasury, it was not the only worthwhile and necessary purpose or 

policy goal that Congress requires for Treasury to use TARP funds. Congress 

requires in the TARP law that the Treasury Secretary use TARP for purposes 

geared toward, not only the impact of the financial crisis on Wall Street, but on 

Main Street as well. Congress required in the final TARP law that Treasury use 

TARP funds to do more than restore stability and liquidity to the financial system, 

but also to protect home values, life savings, retirement funds, college funds, 

preserve homeownership, promote jobs and economic growth, and maximize 

returns to taxpayers. These purposes articulated by Congress in the TARP law are 

not a list of possible outcomes of TARP programs and investment of TARP 

dollars, but instead an expectation that Treasury will use TARP programs to 

achieve these purposes. Treasury’s role and responsibility as the steward over 

TARP has two equally important parts: (1) ensure that the TARP programs are 

successful in achieving the applicable TARP purposes required in the TARP law; 

and (2) ensure that TARP programs and funds are used effectively and efficiently 

and protected from fraud, waste, and abuse. 

Throughout TARP’s six years of history, Treasury has not waited until the end of 

a TARP program to measure progress and success toward the goals set out by 

Congress for TARP, nor has Treasury left achievement of the TARP goals to 

chance. Instead, Treasury has worked with regulators and others to set target 

outcomes early on in TARP programs – what Treasury expected to achieve by 

using TARP funds. These Treasury-defined target outcomes include targeted 

improvement in capital levels for banks in the Capital Purchase Program 

(“CPP”),20 targeted buffer of capital for the largest stress-tested CPP banks,21

a 

return to profitability and a target dealership structure for General Motors 

 20 See Treasury Press Release, “Statement by Secretary M. Paulson, Jr. on Capital Purchase Program,” 10/20/2008; see 

Treasury Press Release, “Treasury Releases March Monthly Bank Lending Survey,” 5/15/2009. 21 See SIGTARP audit report, “Exiting TARP: Repayments by the Largest Financial Institutions,” issued 

September 29, 2011; see Treasury Press Release, “Treasury Secretary Tim Geithner’s Written Testimony for

Congressional Oversight Panel,” 4/21/2009.
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Corporation (“GM”) and Chrysler Group LLC (“Chrysler”),22 targeted 

restructuring of American International Group (“AIG”) including the sale of 

assets,23 targeted capital for Ally Financial Inc. (“Ally”), formerly known as 

General Motors Acceptance Corp. (“GMAC Inc.”),

24 and a positive return in 

CPP.

25 

Treasury did not wait until the end of these TARP programs to measure whether 

these programs would be successful. Treasury actively measured whether these 

TARP programs were on track to achieve the goals set out by Congress in the 

TARP law. Treasury reported publicly and to Congress on that progress.26 

By measuring and reporting on progress, Treasury gained insight into program

results that led to Treasury making changes in TARP programs to make them 

more effective with the end in mind – restored stability and liquidity, and 

maximized return to shareholders. This was particularly true for the largest 

TARP institutions. TARP dollars for the largest TARP institutions came with the 

full support and active involvement of Treasury to ensure success. Treasury was 

actively involved after investing initial TARP dollars, taking extraordinary action, 

as SIGTARP has reported, to support the largest banks, the auto manufacturers, 

 22 See White House Press Release, “Fact Sheet: Financing Assistance to Facilitate the Restructuring of Auto 

Manufacturers to Attain Financial Viability,” 12/19/2008; Treasury Secretary Timothy Geithner Op-Ed: “A rescue 

worth fueling,” 5/31/2011. The op-ed was published on The Washington Post’s website 5/31/2011; see SIGTARP 

audit report, “Factors Affecting the Decisions of General Motors and Chrysler to Reduce Their Dealership Networks,” 

issued July 19, 2010. 23 See Treasury Press Release, “Treasury to Invest in AIG Restructuring Under the Emergency Economic Stabilization 

Act,” 11/10/2008. 24 See SIGTARP report, “Taxpayers Continue to Own 74% of GMAC (Rebranded as Ally Financial Inc.) from the 

TARP Bailouts,” issued January 30, 2013; see the Congressional Oversight Panel March Oversight Report, “The 

Unique Treatment of GMAC Under the TARP,” 3/10/2010. 25 See Treasury Press Release, “Written Testimony of Herbert M. Allison, Jr., Assistant Secretary for Financial Stability 

Domestic Policy Subcommittee of the Oversight and Government Reform Committee,” 12/17/2009. 26 See Treasury’s Monthly Report to Congress, “United States Department of the Treasury Section 105(a) Troubled 

Asset Relief Program Report to Congress for the Period December 1, 2008 to December 31, 2008,” 1/6/2009; 

Testimony of Treasury Secretary Timothy F. Geithner before the Congressional Oversight Panel, 12/10/2009, 

www.gpo.gov/fdsys/pkg/CHRG-111shrg55245/pdf/CHRG-111shrg55245.pdf, accessed 4/8/2015; Treasury Secretary 

Timothy F. Geithner Op-Ed: “A rescue worth fueling,” 5/31/2011. The op-ed was published on The Washington 

Post’s website 5/31/2011; Testimony of Treasury Secretary Timothy F. Geithner before the U.S. House of 

Representatives Committee on Financial Services, “Oversight of the Federal Government’s Intervention at American 

International Group,” 3/24/2009, archives.financialservices.house.gov/media/file/hearings/111/111-20.pdf, accessed 

4/8/2015; Testimony of Treasury Secretary Timothy F. Geithner before the U.S. House of Representatives Committee 

on Oversight and Government Reform, 1/27/2010, http://oversight.house.gov/wpcontent/uploads/2012/01/20100127geithner.pdf, accessed 4/8/2015; see Treasury Press Release, “TARP Bank 

Programs Nearing Profitability after Fifth Third Bancorp Repays $3.4 Billion,” 2/2/2011; see Treasury Press Release, 

“More than 99 Percent of TARP Disbursements to Banks Now Recovered as Six Financial Institutions Deliver Nearly 

Half Billion Dollars in Proceeds to Taxpayers,” 3/16/2011; see Treasury Press Release, “TARP Bank Programs Turn 

Profit After Three Financial Institutions Repay $7.4 Billion,” 3/30/2011. 
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AIG, and Ally.27 For example, Treasury made additional TARP investments and 

agreed to guarantee certain losses for Bank of America Corporation and Citigroup 

Inc. (“Citigroup”),

28 dedicated a Treasury Auto Team to the restructuring of 

Chrysler and GM and funded GM’s bankruptcy with TARP funds,29 invested 

additional TARP funds to purchase Federal Reserve Bank of New York’s interest 

in AIG,30 converted its preferred stock in Citigroup to common stock to 

strengthen Citigroup’s capital structure,31 made additional TARP investments and 

converted its stake in Ally to address capital needs identified in the stress test.32 

When Treasury exited each of these large TARP investments, it reported publicly 

that the use of TARP funds for these programs successfully achieved the goals in 

TARP such as stability, liquidity, maximized returns to taxpayers, and the 

promotion of jobs and economic growth.33

 27 See SIGTARP’S Quarterly Report to Congress dated January 28, 2015, “The Legacy of TARP’s Bank Bailout Known 

as the Capital Purchase Program”; see SIGTARP audit report, “Emergency Capital Injections Provided To Support the 

Viability of Bank of America, Other Major Banks, and the U.S. Financial System,” issued October 5, 2009; see 

SIGTARP audit report, “Extraordinary Financial Assistance Provided to Citigroup, Inc.” issued January 13, 2011; see 

SIGTARP audit report, “Exiting TARP: Repayments by the Largest Financial Institutions,” issued 

September 29, 2011; see SIGTARP audit report, “Factors Affecting the Decisions of General Motors and Chrysler to 

Reduce their Dealership Networks,” issued July 19, 2010; see SIGTARP audit report, “Treasury’s Role in the 

Decision for GM To Provide Pension Payments to Delphi Employees,” issued August 15, 2013; see SIGTARP report, 

“Taxpayers Continue to Own 74% of GMAC (Rebranded as Ally Financial Inc.) from the TARP Bailouts,” issued 

January 30, 2013; see SIGTARP’S Quarterly Report to Congress dated July 25, 2012, “AIG Remains in TARP as the 

Largest TARP Investment.” 28 See SIGTARP audit report, “Extraordinary Financial Assistance Provided to Citigroup, Inc.,” issued January 13, 2011; 

see Treasury’s Monthly Report to Congress, “United States Department of the Treasury Section 105(a) Troubled 

Asset Relief Program Report to Congress for the Period December 1, 2008 to December 31, 2008,” 1/6/2009.

29 See SIGTARP audit report, “Treasury’s Role in the Decision for GM To Provide Pension Payments to Delphi 

Employees,” issued August 15, 2013. 30 See Treasury Press Release, “Treasury Department Statement on AIG’s Transaction Agreement,” 12/8/2010. 31 See SIGTARP audit report, “Extraordinary Financial Assistance Provided to Citigroup, Inc.,” issued January 13, 2011; 

see Treasury Press Release, “Treasury Announces Participation in Citigroup’s Exchange Offering,” 2/27/2009. 32 See Treasury Press Release, “Treasury Announces Additional Investment in GMAC LLC,” 5/21/2009; see Treasury 

Press Release, “Treasury Announces Restructuring of Commitment To GMAC,” 12/30/2009. 33 See Treasury Press Release, “Treasury Department Releases Text of Letter from Secretary Geithner to Hill Leadership 

on Administration’s Exit Strategy for TARP,” 12/9/2009; see Treasury Press Release, “Treasury Receives $45 Billion 

Payment from Bank of America,” 12/9/2009; Testimony, “Secretary of the Treasury Timothy F. Geithner Written 

Testimony before the Congressional Oversight Panel,” 12/10/2009, www.treasury.gov/press-center/pressreleases/Pages/tg437.aspx, accessed 4/10/2015; Treasury Secretary Timothy F. Geithner Op-Ed: “A rescue worth 

fueling,” 5/31/2011. The op-ed was published on The Washington Post’s website 5/31/2011; see Treasury Press 

Release, “Treasury Prices Sale of Citigroup Subordinated Notes for Proceeds of $894 Million, Providing an 

Additional Profit for Taxpayers on TARP Citigroup Investment,” 2/5/2013; see Treasury Press Release, “Treasury 

Sells Final Shares of GM Common Stock,” 12/9/2013; see Treasury’s “Four Year Retrospective Report,” March 2013, 

www.treasury.gov/initiatives/financialstability/reports/Documents/TARP%20Four%20Year%20Retrospective%20Report.pdf; Treasury, “Remarks by 

Treasury Secretary Jacob J. Lew on Conference Call Highlighting Treasury Sale of Its Entire Ally Financial Stake and 

the Wind Down of TARP,” 12/19/2014; see Treasury Press Release, “Treasury Sells Entire Ally Financial Stake, 

Taking Total Recovery to $19.6 Billion and Closing Auto Rescue Program,” 12/19/2014.
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Homeowners who benefit from TARP housing programs deserve no less from 

Treasury than the largest TARP recipients, and taxpayers who fund TARP 

deserve Treasury ensuring the success of TARP programs and the most effective 

use of taxpayer dollars to achieve success. TARP dollars for homeowners should 

come with the full support of Treasury to ensure a TARP program’s success. In 

the Home Affordable Modification Program (“HAMP”), Treasury has not waited 

until the end of the program to measure effectiveness and progress toward the 

TARP goals of protecting home values and preserving homeownership. Treasury 

has been actively involved measuring progress toward those goals. Treasury set a 

target outcome in HAMP of helping 3 million to 4 million at-risk homeowners 

avoid foreclosure by reducing monthly payments to sustainable levels.34 Each 

quarter, Treasury measures and publicly reports on its progress toward that target 

outcome. This has given insight to Treasury that led to Treasury making changes 

to HAMP mid-program including, among other things, extending three times the 

deadline for homeowners to apply for HAMP, Treasury engaging in outreach, and 

Treasury paying counselors to help homeowners submit HAMP applications. In 

addition, although there is more Treasury can do as SIGTARP has recommended, 

Treasury has made many changes to HAMP in an effort to increase its 

effectiveness.

Unlike what Treasury did in HAMP, Treasury did not set a target outcome with 

the Hardest Hit Fund, which has led to a lack of accountability, lost opportunities 

to increase the effectiveness of HHF mid-program, and a significant decrease in 

the number of homeowners who will receive HHF assistance. SIGTARP reported 

in April 2012 that HHF faced two years of delays in getting help to homeowners 

because Treasury did not conduct comprehensive planning, such as setting the 

target outcome, measuring progress, and then making mid-program changes to 

ensure success.35

Treasury rejected SIGTARP’s 2012 recommendation that Treasury set 

measurable program goals, measure progress against those goals, and make 

changes needed to the program to reach those goals. As a result, homeowners 

have suffered. Treasury required participating states to estimate the number of 

homeowners to be helped, but did not set a target outcome of how many 

homeowners Treasury wanted to help. As a result, there is no baseline to measure 

progress. A lack of a baseline does not allow Treasury to escape accountability. 

With Treasury not setting a target outcome, such as the aggregate number of 

homeowners Treasury wants to help with HHF, the 18 states and the District of

Columbia (“19 jurisdictions” or “states”) have collectively reduced by nearly half 

 34 Treasury later clarified that this meant that 3 million to 4 million homeowners will receive offers for a trial 

modification. See SIGTARP audit report, “Factors Affecting Implementation of the Home Affordable Modification 

Program,” issued March 25, 2010. 35 See SIGTARP audit report, “Factors Affecting Implementation of the Hardest Hit Fund Program,” issued 

April 12, 2012.
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(44%) with the number of homeowners estimated to be helped, with HHF 

dropping from 546,562 homeowners in 2011 to 303,386 homeowners, as of 

September 30, 2014. 

Treasury has lost opportunities in HHF. Treasury is responsible for HHF not 

helping as many people as Treasury had expected. If Treasury had worked with 

each state’s housing finance agency (“HFA”) to set a realistic target outcome of 

the number of homeowners to be helped in each state, and rolled the number of 

homeowners into a Treasury target, Treasury could have measured against that 

target and gained better insight into which states were not meeting their portion of 

the target. This insight could have shown Treasury which states needed 

Treasury’s help and resources, or where improvements could have been made. 

Treasury’s desire to use TARP’s Hardest Hit Fund to seek locally tailored 

solutions administered by 19 state HFAs does not relieve Treasury of its 

important responsibilities. The two concepts of Federal responsibility and locally 

tailored solutions are by no means mutually exclusive. As SIGTARP reported in 

2012, a senior Treasury official told SIGTARP: “This is not our program. These 

are their programs.”36 HHF is not a grant program. It is an investment made by 

taxpayers nationwide for the nationally important interest in the hardest-hit 

states.37 Each state has an interest only in its state and has limited resources. 

Treasury, not each state, has an interest in leveraging each of the 19 state

resources with Treasury resources to provide further relief to states that were 

unable to help homeowners on their own. More is required of Treasury than 

dollars. Treasury cannot defer its oversight responsibility to anyone to ensure that 

HHF progresses in the most effective way to achieve the TARP goals of 

protecting home values and preserving homeownership. Congress put Treasury in 

charge of TARP, so Treasury must act to fulfill that responsibility. It cannot do 

that with limited knowledge and limited involvement. 

SIGTARP is not expressing an opinion as to whether the use of TARP funds for 

blight elimination activity is an appropriate use of TARP funds, just as SIGTARP 

has not expressed an opinion on whether any TARP investment was appropriate. 

Just as it has done with other TARP programs, Treasury should not wait until the 

end of HHF in December 2017 to measure success toward the goals set out by 

Congress for TARP, nor should Treasury leave achievement of the TARP goals to 

chance. Homeowners in the hardest-hit states chosen by Treasury deserve every 

chance of success, as do taxpayers who are funding this blight elimination. 

Treasury should follow the same pattern with HHF that Treasury has taken in 

other TARP programs to gain insight, be actively involved, and take action 

beyond initial TARP dollars to ensure the TARP funds are used effectively to 

 36 Treasury, however, has the right to review all press on HHF and HHF blight elimination. 37 Even grant programs need greater Federal oversight. See GAO audit report (GAO-12-34), “Vacant Properties: 

Growing Number Increases Communities’ Costs and Challenges,” issued November 2011.
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ensure the program’s success. This includes every use of TARP dollars in HHF, 

including for demolition of vacant properties. However, SIGTARP has found that 

is not what Treasury is doing.

First, SIGTARP found that the Hardest Hit Fund Blight Elimination Program is 

designed in a way that leaves Treasury in the dark on strategies, decisions, and 

blight elimination activity conducted under HHF and paid for with TARP dollars. 

Treasury has allowed the state HFAs to place much of the decision making and 

the actual blight elimination activities in the hands of city or county/land 

bank/non-profit/for-profit partners, whose identities are unknown to Treasury, 

whose activities using TARP funds are unknown to Treasury, whose strategies 

and decisions on how to execute blight elimination under HHF are unknown to 

Treasury, that are not under contract with Treasury or even in contact with 

Treasury, and over which Treasury conducts no oversight. Treasury has very 

limited knowledge about blight elimination activity being paid for with TARP 

dollars and taking place under a TARP program. Treasury is not keeping itself 

informed or gaining insight of critical activities taking place under HHF blight 

elimination. 

The city or county/land bank/non-profit/for-profit partners, not the HFAs that 

contract with Treasury, make the following decisions under HHF:

 selection of neighborhoods for demolition;

 selection of how much of the vacant residential properties in those 

neighborhoods should be demolished;

 selection of specific properties for demolition;

 determination of applicable laws and regulations;

 whether to conduct engineering and environmental studies, and determining 

the presence of any asbestos to comply with applicable laws and regulations;

 selection of engineering firms and asbestos-removal contractors necessary to 

comply with applicable laws and regulations and contracting with those firms;

 selection of demolition contractors, greening contractors, maintenance 

contractors, and contracting with those vendors; and

 completion of work as required under the contract.

Treasury does not know the outcome of these decisions. Treasury does not know 

the strategies being employed by city or county/land bank/non-profit/for-profit 

partners to select neighborhoods, the number of homes to be demolished in each 

neighborhood, or the properties for blight elimination under HHF. 

Treasury has very limited knowledge and is not keeping itself informed or gaining 

insight of critical activities taking place under HHF blight elimination being paid 

for with TARP dollars. Treasury does not require a detailed accounting on how 
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the TARP funds are spent on blight elimination. Treasury does not know the 

aggregate number or dollar value of demolition, greening, or other awarded 

contracts and subcontracts under HHF for blight elimination. Treasury does not 

know the details of those contracts or subcontracts or even the recipients. 

SIGTARP found that Treasury does not collect, maintain, or review the contracts 

for demolition, greening, and maintenance. Treasury’s HHF Program Director 

told SIGTARP that contract awards are “the state’s business.” However, 

apparently state HFA officials believe that contract awards are the city or county 

land bank’s business. Officials from the two state HFAs that have reported to 

Treasury that they started demolitions under HHF (Michigan and Ohio) told 

SIGTARP that they do not collect the contracts and subcontracts. Officials from 

Ohio’s HFA told SIGTARP that the Ohio HFA “does not collect all 

documentation pertaining to current and future contracts for the local land banks. 

We require thorough support documentation, including invoices and proof of 

payment, for all expenses that are reimbursed with HHF funds.” In another 

example, the Michigan HFA told SIGTARP that it does not monitor or approve 

the contracts or even have a listing of the contractors that their land banks or other 

partners have entered into with external entities.

In other words, Treasury does not have or monitor the contracts and subcontracts 

for which TARP funds are the source of payment, and neither do the states. 

Treasury and HFA officials told SIGTARP that would require going to each 

individual partner to obtain the listing of contracts and subcontracts. However, 

Treasury and the HFAs do not do that. 

Unlike other blight demolition funds these states may receive, TARP funds are 

not grant funds and this is not a grant program. Greater knowledge and insight by 

Treasury of the participants in HHF demolition activities, strategies, and 

decisions, blight elimination activity, and expenditures do not take away a state’s 

ability to tailor local solutions.38 The opposite is true. Treasury’s role as a 

steward of TARP is more than about money. These states that are still struggling 

from the crisis need Treasury’s involvement and full support.

Being in the dark makes it difficult for Treasury to fulfill its important 

responsibilities as the steward of TARP. Limited knowledge about strategies, 

decisions, and blight elimination activity decreases Treasury’s ability to ensure 

that HHF in this area is on track to success or that states and cities or counties are

proceeding with the most effective use of TARP funds. Limited knowledge about 

strategies, decisions, and blight elimination activity decreases Treasury’s ability 

 38 Some of these states, such as Michigan, are already used to providing a detailed accounting and additional information 

on their partners and expenditures for blight elimination activity in non-TARP blight programs, and making that 

accounting and information public. Some land banks are putting addresses of properties demolished under HHF on 

their websites. If there is no harm in the public seeing them, then there is no harm in Treasury seeing them.
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to protect against fraud, waste, and abuse, which could diminish the effectiveness 

of the HHF Blight Elimination Program. 

Treasury can defer administration of a TARP program to another entity, but 

Treasury cannot defer its responsibility and oversight under the TARP law to 

ensure that a TARP program is successful, nor should it because these are the 

hardest-hit states that Treasury selected to help. Responsibility requires 

knowledge. Treasury cannot improve what it does not know. Treasury cannot 

protect what it does not know. Treasury cannot bring transparency to what it does 

not know. 

Second, SIGTARP found that Treasury takes a hands-off approach to the HHF 

Blight Elimination Program and has very limited involvement in the planning or 

execution of the program. 

Treasury has not conducted comprehensive planning that could ensure the success

of blight elimination under HHF, ensure that TARP funds are spent in the most 

effective manner, and protect HHF against the risk of fraud, waste, and abuse. 

Treasury has left much of the planning to the HFAs, which have left much of the 

planning to the city or county/land bank/non-profit/for-profit partners. Treasury’s 

only goal is a high-level goal to stabilize neighborhoods and decrease 

foreclosures, which tie to the goals in the TARP law.

SIGTARP recognizes the challenge of using a Federal program to offer local 

solutions administered by state agencies and Treasury’s desire to give states 

flexibility because HFAs know best about the problems in their states. However, 

flexibility should not mean free rein. This challenge can be mitigated by 

comprehensive planning to ensure that Federal interests and state interests align. 

The first part of mitigating this challenge is for Treasury to identify its Federal 

interests to the states in the form of Treasury-defined target outcomes as it has for 

other TARP programs, rather than let the HFAs or anyone else set the desired 

outcome for a TARP program. 

SIGTARP found that, unlike other TARP programs, Treasury has not set target 

outcomes that it wants the HHF Blight Elimination Program to achieve in order 

for Treasury to ensure that it will meet the high-level goals of stabilized 

neighborhoods and decreased foreclosures, instead deferring to each HFA to set 

the target outcome. Treasury’s HHF Program Director told SIGTARP that 

Treasury left it up to the states to tell Treasury what the states would point to as 

showing that TARP funds went to stabilize neighborhoods and decrease 

foreclosures. Treasury’s HHF Program Director told SIGTARP that it is 

incumbent on the states “to develop their own means or metrics that will point to 

success of the program.” Treasury asking states to measure progress toward 

success is not the same thing as asking states to define success.
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SIGTARP found that HHF Blight Elimination Program is designed so that the city 

or county/land bank/non-profit/for-profit partners are responsible for defining the 

target outcome and measuring their own progress toward that outcome. 

Treasury’s contracts with state HFAs on blight specifically reference the states 

will develop performance indicators in connection with the city- or county-level 

partners. Performance indicators measuring progress are not the same thing as 

defining what targeted outcome is necessary to ensure that the HHF Blight 

Elimination Program successfully achieves stabilized home prices and decreased 

foreclosures. Treasury is relying on the states to set target outcomes. However, 

the HFAs are not actually setting target outcomes, but instead deferring to the city 

or county/land bank/non-profit/for-profit partners. Two state HFAs told 

SIGTARP that they do not have target outcomes, but are deferring to the city or 

county land banks. 

Flexibility of states to offer locally tailored solutions should not mean that states 

or city or county/land bank/non-profit/for-profit partners set the target outcome of 

a Federal TARP program. It is one thing to have the states and the city and 

county land banks measure their own success against Treasury’s target outcome, 

but states, cities, and counties should not define what level of success is expected 

for a TARP program to achieve its high-level TARP goals. That is Treasury’s 

responsibility under TARP law and as the Federal agency administering TARP. 

Treasury did not ask mortgage servicers to define how many homeowners would 

receive affordable and sustainable help from HAMP. Treasury did not ask banks 

to define what level of capital they thought they should hold. Treasury did not 

ask GM to define how it would be restructured. These were all target outcomes 

that Treasury set. If Treasury does not set a target outcome for HHF blight 

elimination, it is leaving the success of a TARP program to chance. This leads to 

a lack of accountability at the city or county level, state level, and Treasury level. 

Treasury-defined target outcomes that Treasury expects to achieve does not take 

away the flexibility of states, but instead gives insight for Treasury and the states 

into whether improvements can be made to make the HHF Blight Elimination 

Program more effective as the program progresses. Treasury has an opportunity 

right now to increase the effectiveness of the program. However, that opportunity 

will diminish with time, given the fast pace of demolition activity.39 If Treasury 

sets target outcomes now, Treasury and the states would then have something to 

measure progress against to determine if each state is on track. State HFA 

officials from Michigan and Ohio told SIGTARP that the only goal Treasury has 

given them is to have the HHF blight money spent by December 31, 2017.40 

 39 For example, in the second quarter of 2014, Michigan reported cumulative demolitions of 315 properties, which had 

increased to 816 the next quarter, and further increased to 1,887 the following quarter. 40 The only other targeted impact that Treasury wants the states to report on and achieve is to spend a maximum of either 

$25,000 or $35,000 per property for demolition and greening.
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Spending the available TARP money should not be Treasury’s end goal. Just as 

the high-level goals of each of Treasury’s largest TARP investments were not met 

upon Treasury investing TARP funds (for example, in banks, auto companies, and 

AIG), Treasury’s high-level goals to stabilize neighborhoods and decrease 

foreclosures is not met upon Treasury investing funds for blight elimination. 

This type of comprehensive planning is not new to Treasury and is a recognized 

best practice for the Federal Government that does not harm a state’s ability to 

tailor local solutions that are aligned with Treasury’s target outcomes. Knowing 

the target outcomes that Treasury is trying to achieve provides a framework for 

states and cities or counties to make choices that are locally tailored, and are also 

consistent with Federal objectives. Just as Treasury has worked with regulators 

and others before to develop target outcomes for TARP programs, Treasury could 

use its own resources and expertise on economic outcomes in consultation with 

each of the six participating states to set Treasury-defined target outcomes it 

wants that are realistic for that state. 

Some potential target outcomes that Treasury could set using its own expertise 

and resources and after consultation with states to gain insight as to whether HHF 

blight elimination is on track for success in each city or county or whether 

improvements could be made are: 

 target level of decrease in foreclosures overall for cities and states;

 target decrease in vacancy rates in targeted neighborhoods, cities and states;

 target level of increases in home values in targeted neighborhoods, cities and 

states;

 target reduction in the percentage of properties with negative equity in 

targeted neighborhoods, cities and states; and

 target reduction in crime rates in targeted neighborhoods, cities and states.41 

Treasury cannot assume that any amount of demolition of vacant properties in any 

area of the city or county will result in stabilized home prices and decreased 

foreclosures. For example, prior to agreeing to allow Michigan to use HHF funds 

for blight elimination, Treasury’s Economic Policy group conducted an economic 

analysis to estimate the stabilization of home prices and decrease in foreclosures 

that would come from demolitions in the City of Detroit, and that analysis 

assumed that the impact would only be felt within a 200-foot radius of the 

demolished property. Additionally, the Government Accountability Office 

(“GAO”) reported that officials in Las Vegas, Nevada, and the surrounding areas 

told GAO that they were able to acquire a few hundred properties with 

 41 Treasury may have other targeted outcomes it wants to achieve such as one, a certain number of contracts awarded 

with best value or low cost, timeliness of the demolition and greening work, demolition in low-income or middleincome neighborhoods, demolition in neighborhoods with senior citizens, and demolition in certain areas with high 

crime or drug rates.
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U.S. Department of Housing and Urban Development (“HUD”) grant funds for 

blight elimination, as of June 2011, but that this number was not enough to 

stabilize the neighborhood.42

Without establishing target outcomes for each state (in consultation with each 

state), Treasury will not be able to see which states need Treasury’s help or 

additional oversight to ensure that the HHF Blight Elimination Program is on 

track for success. The state HFAs do not have the level of expertise and resources 

of Treasury on economic outcomes. Officials from three state HFAs told 

SIGTARP that they do not have an economic analysis to serve as a baseline by 

which they make demolition decisions. For example, a Michigan HFA official 

told SIGTARP that Treasury has not shared its economic analysis on the impact 

of demolitions in Detroit with Michigan’s HFA. This is a perfect example of 

where Treasury could use its significant resources and expertise in consultation 

with the states to ensure the success of the program. 

If Treasury through its Economic Policy group can conduct an economic analysis 

to determine the target outcome of HHF demolition for one city, it can conduct 

them for others. Treasury could combine its expertise and resources with the 

states to conduct economic analysis that leads to Treasury setting realistic target 

outcomes that the states can work towards achieving.

The economic analysis that Treasury already conducted for Detroit provides a 

baseline for Treasury to develop its target outcome. Treasury estimated that 

demolishing a vacant house and greening the lot in Detroit would lower the 

default probability of nearby properties by between 0.7 and 1.7 percentage points 

on average with likely impact on foreclosure rates toward the 1.7 percentage point 

end. Just as it did for Detroit, Treasury could estimate a decrease in foreclosure 

rates that it expects to see in each city or county with the HHF Blight Elimination 

Program and use that to set its target outcome. A Treasury-defined outcome 

would give Treasury and the states immediate and ongoing insight into ways to 

improve the effectiveness of the HHF Blight Elimination Program as the program 

progresses.

Treasury has not waited until the end of other TARP programs to measure 

progress and success toward the goals set out by Congress for TARP, but that is 

what Treasury is doing with HHF blight elimination. With blight elimination, 

Treasury is only requiring reporting on the number of properties demolished, and 

the average cost. Demolition is not the end that Treasury should have in mind. It 

is the outcome of that demolition, not the demolition itself. 

 42 See GAO audit report (GAO-12-34), “Vacant Properties: Growing Number Increases Communities’ Costs and 

Challenges,” issued November 2011.
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Neither Treasury nor the HFAs have developed performance indicators or are 

measuring the impact of demolition, which decreases Treasury’s ability to see 

areas for improvement to ensure effective use of TARP dollars and success in 

TARP goals. Treasury’s contract provides that the HFAs will develop 

performance indicators and measure progress; however, states are deferring to 

city or county/land bank/non-profit/for-profit partners. 

The states can and should develop performance indicators at the start of the 

program so that performance can be measured as the program progresses, but that 

has not happened. Michigan, Ohio, and Indiana HFA officials told SIGTARP that 

the program is too new to identify metrics and performance indicators to measure 

program effectiveness. For example, one state HFA official told SIGTARP that 

“it is something that we are set up to do once we’re further into the program.” 

Officials from Treasury and the HFAs told SIGTARP that progress cannot be 

measured for a long time, possibly until after the program closes. A Michigan 

HFA official told SIGTARP that measurement of the progress would be 

conducted post program.

Treasury is aware that the states have not established performance indicators and 

are not measuring progress of the impact of HHF blight elimination activities. 

Treasury does not require that the HFAs currently report on progress toward 

target outcomes or Treasury’s high-level goal of stabilizing neighborhoods and 

decreasing foreclosures. Treasury does not know when they would require states 

to develop performance indicators or report on those performance indicators. A 

Treasury official told SIGTARP that the states will design their own reports to 

Treasury and will not provide those to Treasury “until the program is further 

seasoned.” Treasury’s HHF Program Director told SIGTARP that she did not 

know in the time that Treasury’s HHF program was around that Treasury would 

see increases in property values. If this is a target outcome that Treasury 

considers important, then it should make that apparent to the states and set a target 

for the increase. Treasury is a permanent department and will continue to be 

around to measure progress. Treasury’s oversight can and should continue well 

past the expenditure of the HHF funds. Federal funds require steps be taken to 

ensure program success and protect taxpayers’ investment. It is Treasury’s 

responsibility to conduct oversight over a TARP program.

The best way for Treasury to ensure that these TARP funds are used in the most 

effective way to stabilize home prices and decrease foreclosures caused by vacant 

homes is by measuring with short-term feedback. This will allow Treasury to 

make decisions based on what the HHF Blight Elimination Program is actually 

doing, not based on a high-level goal Treasury projects about the future with no 

specificity or targeted approach. It will help Treasury make decisions about how 

much TARP funding to put toward blight elimination and help decide whether to 

expand to other states and other cities within states already participating. 
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Measuring backward with short-term feedback can lead to improvements. 

Treasury decreases its ability to conduct effective oversight without this feedback.

While certain indicators of the impact of HHF blight elimination (in combination 

with other factors) may take time to measure the progress, others do not. For 

example, if Treasury set a target decrease in foreclosures, two performance 

indicators that could measure progress could be a specified decrease in mortgage 

defaults and foreclosure filings in each targeted city or county where HHF blight 

elimination is conducted, aggregated by state. A zero or very low decrease in the 

default rate of foreclosure filings of cities or counties that had HHF demolition 

might indicate that the city or county land bank’s strategy in choosing properties 

or neighborhoods may not be as effective as it should be. If Treasury set a target 

increase in home values, states could set performance indicators including 

measuring the price of home sales on an ongoing basis, measuring home values as 

determined by local tax authorities annually, and by measuring the number of 

short sales. No improvement in these indicators within a set period of time might 

indicate that the city or county land bank’s strategy in choosing properties or 

neighborhoods may not be effective as it should be.

Tracking the impact of HHF blight elimination on a periodic basis would allow 

Treasury and the HFAs to give guidance to the city and county land banks that 

could allow for a greater economic impact. By keeping itself in the dark, and 

having little involvement in strategic decisions on blight elimination, Treasury 

misses an opportunity to help states and cities or counties develop a strategy that 

has the most effective use of HHF dollars and the best chance for success.43 

SIGTARP found that the HHF Blight Elimination Program is designed so that the 

city or county/land bank/non-profit/for-profit partners are responsible for 

measuring progress. In other words, Treasury is allowing the city and county land 

banks to measure their own success. As currently envisioned, that may not be 

until the program ends. In addition to concerns over how this leads to a lack of 

accountability at a Federal, state, and local level, without that measurement, 

Treasury could lose opportunities to ensure the success of the program through 

improvements.

Although Treasury should have developed its target outcomes at the beginning of 

the program in 2013, it is not too late for Treasury to do so now, and it is also not 

too early for states to develop performance indicators. The source of TARP funds 

is the Federal Government, with Treasury as the steward over TARP funds. 

Congress and the public rightfully expect Treasury to administer the program and 

 43 Treasury is also missing an opportunity as it oversees blight elimination in all six states to provide guidance on best 

practices or lessons learned to ensure the most effective use of HHF for blight elimination. Treasury should be 

proactive in providing this program and each state all of its resources. Treasury guidance including best practices 

would not take away a state’s ability to create locally tailored approaches.
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ensure that TARP funds are appropriately spent and are achieving the desired 

goals.

Treasury has not taken a risk-based approach to identify and mitigate risks that 

could form barriers to the most effective use of TARP funds for demolition activity 

or could lead to fraud, waste, and abuse. 

The design of the HHF Blight Elimination Program that places much of the 

control and decision making in the hands of city and county land banks far 

removed from Treasury, which conduct work through contractors removed even 

farther from Treasury, produces certain risks that Treasury should assess and 

mitigate through comprehensive planning. Treasury does not have or monitor the 

contracts and subcontracts for blight elimination activity for which TARP funds 

are the source of payment, and neither do the two state HFAs that have started 

demolitions (Ohio and Michigan). A Michigan HFA official told SIGTARP that 

the HFA does not monitor or approve the contracts or even have a listing of the 

entities that the city- or county-level partners contract with to undertake blight 

elimination activities under HHF. 

Treasury has an oversight responsibility to ensure that the HFAs, and their city or 

county local partners, are ready for, and can effectively handle, any increase in 

demolition and other activities under HHF. One of the risks that Treasury has 

already experienced with HHF is that the HFAs did not have the resources, 

staffing, training, and knowledge to implement HHF, which led to significant 

delays in getting help to homeowners. Even if some of these six state HFAs 

(Alabama, Ohio, Illinois, Indiana, Michigan, and South Carolina) have experience 

with blight elimination, the TARP funds allocated for blight elimination will 

likely result in a significant increase in the amount of blight elimination activities 

these states and cities have conducted. An Indiana HFA official told SIGTARP 

that there has never been a program like this in Indiana. 

Treasury should learn the identities of the city or county/land bank/non-profit/forprofit partners, and conduct oversight to ensure that they have the staffing, 

knowledge, experience, and training to handle the level of contracting and 

demolition and other blight activities required under this TARP program. HUD 

Office of Inspector General has issued several reports on blight elimination using 

a HUD grant program including a January 2014 report on weaknesses for the City 

of Detroit because the city department was without the necessary knowledge, 

experience, and training to handle the increase in demolition jobs that came with 

HUD grant funds. It is unknown whether this same entity is involved with the 

TARP-funded demolitions; however, the problem could reside with any entity. 

Treasury will not know that if it has no insight.
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By allowing itself to be in the dark, Treasury has created a TARP program with 

very limited transparency to Treasury and the public, which impacts risk. Greater 

transparency would not hurt HHF’s approach to find locally tailored solutions. 

Greater transparency to the public builds trust and empowers taxpayers who fund 

TARP programs and have a right to transparency in how those funds are spent. 

Greater transparency allows taxpayers to hold Treasury accountable for how 

Federal dollars are used and what results they achieve. Greater transparency is 

required for oversight. As a result of the lack of transparency, it is difficult for 

Treasury and taxpayers to understand details of HHF Blight Elimination Program 

decisions, strategies, and activities, making oversight difficult and impacting risk.

Given that Treasury decided to make a TARP investment in eliminating vacant

properties, Treasury should do much more to fulfill its oversight responsibilities 

and ensure success, including setting target outcomes, providing guidance, 

conducting oversight, and monitoring activities while still allowing states to have 

flexibility in execution. Treasury should bring all that it can to leverage its own 

resources, knowledge, and experience with those of the states. Federal oversight 

and support are not mutually exclusive from a state’s flexibility to tailor a 

program to local problems. Federal dollars must come with some Federal 

involvement, guidance, assistance, transparency, and oversight. Homeowners 

deserve the same extraordinary Treasury action and support that Treasury gave 

the largest TARP institutions. Treasury cannot do that if it continues to be in the 

dark, with a hands-off approach and limited involvement that limits transparency, 

oversight, and can impact risk. As it has done with other TARP programs, 

Treasury needs to be able to ensure that blight elimination is operating in the way 

to most effectively use TARP dollars. It is Treasury, not the individual six states, 

that is responsible for reporting on an interim basis that the HHF Blight 

Elimination Program is on track to achieve the protection of home values and 

preservation of homeownership as required by TARP, just as Treasury has done 

with other TARP programs. When HHF ends in December 2017, it is Treasury, 

not the individual six states, that is responsible for reporting whether Treasury’s 

use of those TARP funds successfully achieved TARP goals.
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Recommendations

1. Treasury should ensure that state housing finance agencies and all of their city 

or county/land bank/non-profit/ for-profit partners have the resources, staffing, 

training, and knowledge, and are ready for, and can effectively handle the 

increase in contracting, demolition, and other blight elimination activities 

contemplated under HHF.

2. Treasury should keep itself informed and gain insight of critical activities 

taking place under HHF blight elimination by knowing the identities of all 

who will participate in blight elimination activity under HHF or receive TARP 

funds including city or county/land bank/non-profit/ for-profit partners and 

their subcontractors through required reporting by state HFAs to Treasury on 

an ongoing basis. 

3. Treasury should keep itself informed and gain insight of critical activities 

taking place under HHF blight elimination by requiring reporting by state 

HFAs on: (1) the neighborhoods selected for HHF blight elimination and the 

strategy for choosing that neighborhood; and (2) property address including 

zip codes for any property demolished or removed under HHF.

4. Treasury should increase transparency by publicizing on its website: (1) a list 

of all city or county/land bank/non-profit/ for-profit partners that will 

participate in blight elimination activity under HHF on a state by state basis; 

(2) a list of addresses including zip code where a property has been 

demolished or removed under HHF on a city and state basis; (3) Treasury’s 

expected target outcomes by city and state; and (4) performance indicators to 

measure progress by city and state.

5. Treasury should engage in comprehensive planning to ensure that blight 

elimination under HHF progresses in the most effective way by, within 60 

days, setting target outcomes for HHF blight elimination of how much 

Treasury expects blight elimination under TARP to increase home values and 

decrease foreclosures by city and state. Treasury can consult with the state 

HFAs as to set realistic target outcomes, but should not defer to state HFAs to 

define success. Treasury should share its target outcome with each state HFA.

6. Treasury should engage in comprehensive planning to ensure that blight 

elimination under HHF progresses in the most effective way by, within 60 

days, requiring state HFAs participating in blight elimination activities under 

TARP to develop performance indicators such as decreases in default rates or 

foreclosure filings, or increases in home values through home sales and annual 

tax assessments to measure progress towards Treasury’s target reduction in 

foreclosures and target increase in home values. Treasury should use its 
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expertise and resources to help the state HFAs develop performance 

indicators. Treasury should require reporting by state HFAs on a periodic 

basis no less than bi-annually on chosen performance indicators and use that 

reporting to monitor which cities and states are on track to achieve 

successfully Treasury’s goal and to identify improvements to increase 

effectiveness.

7. Treasury should require quarterly detailed accounting by state HFAs of how 

TARP funds are spent reimbursing local partners for blight elimination 

activities under HHF that lists actual TARP reimbursed expenditures for each 

local partner by each category of blight elimination activity, including 

demolition, acquisition, greening, maintenance, asbestos removal, engineering 

studies, environmental studies, or any other category of expenditures.

8. Treasury should require state HFAs to develop a system of internal controls 

targeted specifically at blight elimination.

9. Treasury should increase the effectiveness of oversight at both the Treasury

and state HFA levels by (1) collecting all contracts and subcontracts for HHF 

blight elimination activities; and (2) requiring the state HFAs to collect all 

contracts and subcontracts for HHF blight elimination activities.
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Management Comments and SIGTARP’s 

Response

Treasury provided comments to the draft report. SIGTARP addressed those 

comments where applicable. Treasury generally disagreed with SIGTARP’s 

findings citing to the expertise of states and need for states’ flexibility, an issue 

that SIGTARP has addressed in the audit. Treasury did not agree to implement 

SIGTARP’s recommendations, but said they would consider them.
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Appendix A – Objectives, Scope, and Methodology

SIGTARP performed this audit under authority of Public Law 110-343, as amended, which also 

incorporates the duties and responsibilities of inspectors general under the Inspector General Act of 

1978, as amended. We initiated this audit as part of our continuing oversight of TARP. The specific 

objectives of this audit were to determine:

 the status of HHF’s Blight Elimination Program;

 Treasury’s role in the program; and

 factors affecting the implementation of the HHF Blight Elimination Program.

The scope of the audit covered the six state HFAs.

44 Treasury approved to reallocate approximately

$372 million in TARP funds for blight elimination activities under HHF and covers the period from 

June 2013 through March 2015. We conducted our audit work from October 2014 through 

March 2015 in Washington, D.C.

SIGTARP interviewed officials from Treasury’s Office of Financial Stability (“OFS”) and three 

state HFAs, Michigan, Ohio, and Indiana. We reviewed and analyzed requested data from OFS and 

the state HFAs, including (but not limited to) the state HFAs’ proposals and Housing Participation 

Agreements, the HFAs’ quarterly performance reports, the HFAs’ program guidelines, Treasury’s 

aggregate quarterly performance reports, and Treasury’s Program Change Committee meeting 

minutes. In addition, SIGTARP reviewed press releases related to blight elimination and Treasury’s 

and the state HFAs’ websites for information related to the HHF Blight Elimination Program. 

SIGTARP also reviewed testimony and books by Treasury officials and performed internet searches 

for information related to city or county/land bank/non-profit/for-profit partners and performed best 

practices research related to blight elimination activities.

SIGTARP conducted the audit in accordance with generally accepted government auditing standards 

established by the GAO. Those standards require that SIGTARP plan and perform the audit to 

obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions 

based on our audit objectives. SIGTARP believes that the evidence obtained provides a reasonable 

basis for our findings and conclusions based on our audit objectives.

Limitations on Data

SIGTARP relied upon OFS and the state HFAs to identify and provide email communication and 

documentation related to the HHF Blight Elimination Program. It is possible that the documentation 

provided did not reflect a comprehensive response to SIGTARP’s documentation requests, 

potentially limiting SIGTARP’s review.

 44 The six states include Michigan, Ohio, Indiana, Illinois, South Carolina, and Alabama.
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Use of Computer-Processed Data

SIGTARP relied upon computer-processed data from the state HFAs (quarterly performance reports) 

and Treasury (aggregate quarterly performance reports) to report the number of structures 

demolished, denied, withdrawn, and in process; total assistance provided; and median assistance 

spent on acquisition, demolition, and greening. We did not validate the accuracy of the data because 

we did not have access to the underlying HFA or Treasury data. 

Internal Controls

To address the reporting objectives in this audit, SIGTARP performed a limited review interviewing 

Treasury and state HFA officials, and reviewing selected Federal and state laws and regulations, and 

Treasury and state policies and procedures to determine the extent to which policies and procedures 

existed. 

Prior Coverage

SIGTARP reviewed its April 2012 audit of the HHF program as it relates to Treasury’s role in 

overseeing and implementing the HHF program and providing TARP assistance to state HFAs, and 

its February 2009 initial report to Congress, relating to Treasury advancing economic stability 

through transparency, coordinated oversight and robust enforcement. In addition, SIGTARP 

reviewed audit work performed by GAO and HUD OIG related to blight elimination activities. 
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Appendix B – Acronyms and Abbreviations

19 jurisdictions or states 18 states and the District of Columbia

AIG American International Group

Ally Ally Financial Inc.

Chrysler Chrysler Group LLC

Citigroup Citigroup Inc.

CPP Capital Purchase Program

Fannie Mae Federal National Mortgage Association

Freddie Mac Federal Home Loan Mortgage Corporation

GAO Government Accountability Office

GM General Motors Corporation

GMAC Inc. General Motors Acceptance Corp. 

GSE Government-sponsored enterprise

HAMP Home Affordable Modification Program

HFA housing finance agency

HHF Housing Finance Agency Innovation Fund for the Hardest Hit Housing 

Markets (also “Hardest Hit Fund”)

HUD U.S. Department of Housing and Urban Development

HUD OIG Department of Housing and Urban Development Office of Inspector 

General 

NSP Neighborhood Stabilization Program 

OFS Office of Financial Stability

RFPs Requests for Proposals

SIGTARP Office of the Special Inspector General for the Troubled Asset Relief 

Program 

TARP Troubled Asset Relief Program

Treasury U.S. Department of the Treasury
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Appendix C – Audit Team Members

This audit was conducted and the report was prepared under the direction of Bruce S. Gimbel, 

Deputy Special Inspector General for Audit and Evaluation, and Jenniffer F. Wilson, Assistant 

Deputy Special Inspector General for Audit and Evaluation, Office of the Special Inspector General 

for the Troubled Asset Relief Program.

Staff members who conducted the audit and contributed to the report include Vonda Batts, Yusuf 

House, William Saunders, Katherine McCall, and Cynthia Broome.
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Appendix D – Management Comments
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SIGTARP Hotline

If you are aware of fraud, waste, abuse, mismanagement, or misrepresentations associated with the Troubled 

Asset Relief Program, please contact SIGTARP.

By Online Form: www.SIGTARP.gov By Phone: Call toll free: (877) SIG-2009

By Fax: (202) 622-4559

By Mail: Office of the Special Inspector General

for the Troubled Asset Relief Program

1801 L Street., NW, 3rd Floor

Washington, D.C. 20220

Press Inquiries

If you have any inquiries, please contact our Press Office:

Troy Gravitt

Director of Communications

Troy.Gravitt@treasury.gov

202-927-8940

Legislative Affairs

For Congressional inquiries, please contact our Legislative Affairs Office:

Joseph Cwiklinski

Director of Legislative Affairs

Joseph.Cwiklinski@treasury.gov

202-927-9159

Obtaining Copies of Testimony and Reports

To obtain copies of testimony and reports, please log on to our website at www.SIGTARP.gov.