SIGTARP-17-001 January 11, 2017

OFFICE OF THE SPECIAL 

INSPECTOR GENERAL FOR 

THE TROUBLED ASSET SIGTARP RELIEF PROGRAM 

OFFICE OF THE SPECIAL 

INSPECTOR GENERAL FOR 

THE TROUBLED ASSET 

RELIEF PROGRAM 

Evaluation Report

Improving TARP’s Investment in 

American Workers 
SIGTARP-17-001 January 11, 2017

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Office of the special inspector general 

For the Troubled Asset Relief Program 

1801 L Street, NW, 4th Floor 

Washington, D.C. 20220 

SIGTARP-17-001 January 11, 2017

January 11, 2017 

MEMORANDUM FOR: The Honorable Jacob J. Lew – Secretary of the Treasury 

 /Signed/ 

FROM: Honorable Christy Goldsmith Romero – Special Inspector General 

for the Troubled Asset Relief Program 

SUBJECT: Improving TARP’s Investment in American Workers 

(SIGTARP 17-001) 

We are providing this report for your information and use. It discusses homeowners who were 

denied TARP unemployment assistance. 

The Office of the Special Inspector General for the Troubled Asset Relief Program conducted 

this evaluation (engagement code 009) under the authority of the Emergency Economic 

Stabilization Act of 2008 and 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 considered comments from the Department of the Treasury when preparing the report. 

Treasury’s comments are addressed in the report, where applicable, and a copy of Treasury’s 

response is included in its entirety. 

We appreciate the courtesies extended to our staff. For additional information on this report, 

please contact Ms. Jenniffer F. Wilson, Deputy Special Inspector General for Audit and 

Evaluation (Jenniffer.Wilson@treasury.gov /202-622-4633); or Mr. Chris Bosland, Assistant 

Deputy Special Inspector General for Audit and Evaluation (Christopher.Bosland@treasury.gov

/202-927-9321). 
SIGTARP-17-001 January 11, 2017

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IMPROVING TARP’S INVESTMENT IN AMERICAN WORKERS

SIGTARP-17-001 i January 11, 2017

Summary 

TARP’s	Hardest	Hit	Fund	is	an	investment	in	

American	workers,	providing	a	temporary	

safety	net	to	help	save	the	homes	of	

unemployed	and	underemployed	working	

class	Americans	in	Rust	Belt	states	(such	as	

Ohio,	Michigan,	Indiana	and	Illinois),	

Southern	states	(such	as	North	Carolina,	

South	Carolina,	Alabama,	Tennessee,	and	

Georgia),	and	10	other	states.		

HHF	has	helped	more	than	a	quarter	of	a	

million	homeowners,	but	even	good	

programs	can	be	better.	The	program	is	

meeting	a	real	need,	one	that	continues.	The	

need	for	this	unemployment	bridge—and	

other	Hardest	Hit	Fund	programs,	like	blight	

demolition—remains	so	critical	that,	in	

December	2015,	Members	of	Congress	from	

Ohio	and	Michigan	worked	across	the	aisle	to	

convince	Congress	to	add	$2	billion	to	the	

program.		

Hardest	Hit	Fund	dollars	have	been	slow	to	

flow	in	many	states,	and	more	than	160,000	

people	were	denied	HHF	assistance.	SIGTARP	

analyzed	data	provided	by	state	agencies	on	

each	person	who	was	turned	down	for	this	

program.		

What SIGTARP Found 

SIGTARP	found	that	most	of	the	people	who	

were	denied	Hardest	Hit	funds	earned	less	

than	$30,000,	calling	into	question	whether	

the	program	is	effective	in	reaching	those	

hardest	hit.	State	agencies	that	distribute	

Hardest	Hit	Fund	unemployment	assistance	

turned	down	84,965	people	who	earned	less	

than	$30,000,	including	64,979	people	who	

made	less	than	$20,000.	SIGTARP	found	that,	

in	12	of	the	19	states—mostly	in	the	rust	belt	

and	south—nearly	three	out	of	four	people	

turned	down	for	these	Federal	funds	earned	

less	than	$30,000.	

Congress	required	that	these	TARP	funds	be	

used	to	bail	out	American	workers,	not	just	to	

bail	out	companies	like	General	Motors.	

Hardest	Hit	funds	could	help	autoworkers	

laid	off	when	General	Motors	shut	down	their	

plants,	as	well	as	workers	caught	in	the	ripple	

effect	of	a	shutdown,	like	workers	at	auto	

parts	suppliers	or	at	neighboring	retail	shops.	

Michigan	and	Ohio	are	among	the	states	that	

have	the	most	TARP	dollars	set	aside,	but	also	

have	some	of	the	highest	percentages	of	

people	turned	down	for	the	Hardest	Hit	Fund	

who	earned	less	than	$30,000.	In	cities	where	

General	Motors—which	received	$50	billion	

in	TARP	funds—or	its	suppliers	closed	plants	

or	laid	off	workers,	denial	rates	are	even	

higher	for	those	who	made	less	than	$30,000.		

*	Includes	Dayton	and	nearby	cities	of	Moraine	and	Vandalia.	

Despite	returning	to	profitability,	GM	and	

other	auto	companies	closed	plants	and	laid	

off	workers,	even	in	the	last	year.	GM	

announced	that	2,000	additional	workers	in	

Michigan	and	Ohio	face	layoffs	early	in	the	

coming	year.		

The	findings	uncovered	by	this	evaluation	

indicate	that	there	may	be	eligibility	criteria	

that	are	too	stringent.	There	may	be	valid	

reasons	why	these	people	were	turned	down,	

but	it	is	impossible	to	know	because	SIGTARP	

found	that	state	agencies’	records	were	non‐

existent,	missing,	or	incomplete	regarding	

why	the	agencies	turned	down	people	making	

less	than	$30,000.		

State	agencies	should	unlock	the	full	potential	

of	the	program	by	eliminating	unnecessary	
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SIGTARP-17-001 ii January 11, 2017

criteria	that	do	not	exist	in	other	states	or	

that	do	not	reflect	the	reality	of	the	working	

class	in	that	state.	For	example,	some	states	

require	that	the	person	show	enough	income	

to	pay	their	mortgage	in	the	future,	which	is	

not	realistic	for	some	people	seeking	

temporary	help	with	their	mortgage	until	

they	can	get	a	full	time	job.	

This	program	has	a	lot	more	potential	to	

provide	a	safety	net	in	certain	communities	

until	jobs	return	to	these	towns,	but	that	

potential	needs	to	be	unlocked.	

What SIGTARP Recommends 

Treasury	and	state	agencies	should:	(1)	

eliminate	unnecessary	program	criteria;	(2)	

open	up	eligibility	to	workers	facing	layoffs	so	

that	they	do	not	have	to	first	fall	behind	on	

their	mortgage;	and	(3)	state	agencies	should	

keep	detailed	records	on	why	the	state	denied	

each	person.	

In	response	to	a	draft	of	this	report,	Treasury	

provided	a	letter	and	some	technical	

comments,	which	SIGTARP	addressed	where	

applicable.	In	its	response,	Treasury	did	not	

address	SIGTARP’s	findings,	but	said	it	

“...appreciates	SIGTARP’s	analysis	and	is	

closely	examining	[SIGTARP’s]	

recommendations.”	
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SIGTARP-17-001 iii January 11, 2017

Table of Contents 

Summary .............................................................................................................................. i

Table of Contents .............................................................................................................. iii

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

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

85,000 People Who Earned Less Than $30,000 Were Turned Down for Hardest 

Hit Funds ....................................................................................................................... 4

In 6 States (Including Ohio, North Carolina, and Indiana), 3 of 4 People Turned 

Down for Hardest Hit Funds Earned Less Than $30,000, and Nearly 3 of 4 

People in 6 Other States (Including Michigan, Georgia, Illinois, Kentucky, and 

Tennessee) ............................................................................................................... 5

High Percentages of People Turned Down for the Hardest Hit Fund Who Live 

in Cities Where General Motors Closed a Plant Earned Less Than $30,000 ........... 8

SIGTARP Could Not Determine from State Records Why People Earning Less 

Than $30,000 Were Turned Away, Which Could Be Easily Fixed ........................... 12

To Level the Playing Field, States Can Remove Unnecessary Restrictions That: 

(1) Do Not Exist in Other States for These Dollars; and (2) Do Not Reflect 

the Reality of Working Class Americans .................................................................. 13

Conclusion ........................................................................................................................ 18

Recommendations ........................................................................................................... 21

Management Comments and SIGTARP’s Response ..................................................... 22

Appendix A – Objective, Scope, and Methodology ....................................................... 23

Appendix B – Acronyms and Abbreviations .................................................................. 26

Appendix C – Evaluation Team Members ...................................................................... 27

Appendix D – Management Comments .......................................................................... 28

 
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Introduction 

TARP’s	Hardest	Hit	Fund	is	an	investment	in	American	workers.	The	

Government	bailed	out	companies	such	as	General	Motors	(“GM”),	but	

Congress	required	that	bailout	funds	also	go	to	Americans	(like

autoworkers)	to	save	their	homes.	TARP’s	Hardest	Hit	Fund	provides	a	

temporary	safety	net	to	save	the	homes	of	unemployed	or	

underemployed	working	class	Americans	in	Rust	Belt	states	(such	as	

Ohio,	Michigan,	Indiana	and	Illinois),	Southern	states	(such	as	North	

Carolina,	South	Carolina,	Alabama,	Tennessee,	and	Georgia),	and	10	other	

states.	TARP	funds	pay	part	of	the	mortgage	of	American	workers	who	

lost	their	jobs	through	no	fault	of	their	own	(or	saw	their	paychecks	cut),	

generally	for	a	year	or	two	at	most,	while	they	look	for	a	full‐time	job.		

Out	of	19	states,	with	the	exception	of	the	highly	populated	California	and	

Florida,	Treasury	set	aside	the	most	dollars	to	Ohio	($762	million)	and	

Michigan	($761	million).1	In	Ohio	and	Michigan,	TARP	funds	could	help	

autoworkers	laid	off	when	GM	shut	down	their	plant,	or	those	caught	in	

the	ripple	effect	of	a	shutdown,	like	workers	at	auto	parts	suppliers	or	at	

neighboring	retail	shops.	Near‐empty	plants	and	abandoned	houses	serve	

as	eyesores	to	neighbors	desperate	to	keep	their	property	values	up.	The	

Hardest	Hit	Fund	also	commits	more	than	$811	million	to	demolish	

blighted	abandoned	houses	in	Ohio,	Michigan,	Indiana,	Illinois,	Alabama,	

South	Carolina,	Tennessee,	and	Mississippi.	

Dollars	have	been	slow	to	flow	in	many	states,	but	the	need	for	this	

unemployment	bridge	and	blight	demolition	is	so	critical	that	in	

December	2015,	Members	of	Congress	from	Ohio	and	Michigan	worked	

across	the	aisle	to	convince	Congress	to	add	$2	billion	to	the	program.2	In	

Ohio	and	Michigan,	the	program	has	done	a	better	job	than	many	other	

states	of	distributing	these	funds	to	homeowners,	with	Ohio	homeowners	

exhausting	all	of	the	funds	before	the	additional	money	from	Congress.	

 

1	Treasury	also	committed	$715	million	in	these	TARP	funds	to	Illinois.	North	Carolina	can	receive	$706	

million.	Treasury	has	obligated	$9.6	billion	in	TARP	funds	for	the	Hardest	Hit	Fund.	 2	Unemployment	is	still	above	average	in	cities	such	as	Detroit,	Michigan,	and	Cleveland,	Ohio,	and	

underemployment	remains	a	struggle	in	these	and	other	areas.	
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SIGTARP-17-001 2 January 11, 2017 

Despite	GM	returning	to	profitability,	GM	and	others	closed	plants	and	

laid	off	workers,	even	in	the	last	year.3	The	additional	TARP	funds,	which	

were	allocated	in	2016,	allowed	Ohio	to	increase	funding	of	blight	

demolition	in	18	counties	and	to	reopen	its	unemployment	program	for	

laid	off	workers	in	September	2016.	Autoworkers	in	Ohio	and	Michigan	

will	suffer	more	layoffs.4	GM	announced	that,	in	January	2017,	it	will	lay	

off	more	than	2,000	workers	at	2	plants	in	Ohio	and	Michigan.5		

This	program	has	a	lot	more	potential	to	provide	a	safety	net	in	certain	

communities	until	jobs	return	to	these	towns,	but	that	potential	needs	to	

be	unlocked.	It	has	helped	263,000	people	pay	their	mortgage—half	of	

those	estimated.	More	than	160,000	people	were	turned	down.	Another	

170,000+	people	applied,	but	withdrew	their	application,	perhaps	

because	they	did	not	meet	the	criteria.	Likely	even	more	people	did	not	

apply	at	all	knowing	they	did	not	meet	the	criteria.	As	an	Inspector	

General’s	job	is	to	root	out	fraud,	waste,	and	abuse,	and	recommend	

improvements	to	effectiveness	and	efficiency,	SIGTARP	evaluated:		

 Who	applied	for	these	funds	and	were	denied,	and		

 Whether	there	are	unnecessary	restrictions	that	can	be	lifted	to	

unlock	the	program’s	potential.		

SIGTARP	conducted	this	evaluation	in	accordance	with	the	“Quality	

Standards	for	Inspection	and	Evaluation”	established	by	the	Council	of	

the	Inspectors	General	on	Integrity	and	Efficiency.	For	a	discussion	of	the	

evaluation’s	scope	and	methodology,	see	Appendix	A.	

 

3 In	October	2015,	GM	announced	that	it	would	lay	off	about	500	hourly	workers	at	its	Orion	Assembly	plant	

in	Michigan	that	makes	the	compact	car	Chevrolet	Sonic.	Ford	laid	off	700	workers	in	Wayne,	Michigan	

where	the	Ford	Focus	was	made	and,	according	to	press	reports,	announced	in	September	2016	that	it	

would	move	all	of	its	remaining	small	car	production	in	the	United	States	to	Mexico.	In	April	2016,	Fiat	

Chrysler	announced	it	would	lay	off	about	1,400	workers	at	its	Sterling	Heights	Assembly	Plant	in	

Michigan.	 4	In	October	2016,	GM	announced	that	it	will	discontinue	its	iron	casting	division	at	its	Defiance	foundry,	

which	will	result	in	the	layoff	of	157	employees	by	2018.	

5	On	January	16,	2017,	about	840	workers	will	be	laid	off	at	GM’s	plant	in	Lansing,	Michigan	that	makes	the	

Chevrolet	Camaro	and	Cadillac	ATS	and	CTS	luxury	cars.	One	week	later,	GM	will	cut	production	at	its	

Lordstown,	Ohio	plant	that	makes	the	Chevrolet	Cruze,	which	will	lay	off	approximately	1,250	workers.	

Lordstown	already	suffers	from	above	average	unemployment.			
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SIGTARP-17-001 3 January 11, 2017 

Background 

The	19	state	agencies	in	contract	with	Treasury	to	distribute	these	funds	

have	largely	paid	them	(more	than	72%)	to	unemployed	and	

underemployed	homeowners.	Treasury	described	the	purpose	of	Hardest	

Hit	Fund	unemployment	assistance	as	follows:	

Responsible families across the country have found themselves unable to 

pay their mortgages due to unemployment or underemployment. The 

economic downturn has led to a record number of workers suffering from 

long term unemployment, and millions more are working part-time 

because they cannot find full time or otherwise adequate work. This 

assistance is designed to help thousands of families keep making their 

payments and stay in their homes until they can find work.6

The	19	states	Treasury	picked	in	2010	to	receive	the	TARP	funds	had	

high	sustained	unemployment	and	high	numbers	of	underwater	

homeowners.	These	states	are	California,	Florida,	Michigan,	Nevada,	

North	Carolina,	Ohio,	Arizona,	Oregon,	Rhode	Island,	South	Carolina,	

Alabama,	the	District	of	Columbia,	Georgia,	Illinois,	Indiana,	Kentucky,	

Mississippi,	New	Jersey,	and	Tennessee.	

Treasury	provides	these	TARP	funds	to	homeowners	through	the	state	

agencies.	When	a	state	housing	finance	agency	(“state	agency”)	approves	

a	homeowner,	it	requests	the	mortgage	servicer’s	agreement.	A	servicer	

participating	in	HHF	should	agree	because	it	will	receive	either	monthly	

payments	or	a	lump	sum.	The	states	draw	down	on	TARP	funds	from

Treasury.	Already	$6.8	billion	(70%)	of	the	total	$9.6	billion	has	been	

drawn	down.	Some	of	the	remaining	30%	may	already	be	committed,	as	

long	as	the	homeowner	stays	in	the	home.		

 

 

6	Treasury,	“Guidelines	for	HFA	Proposal	Submission	for	Unemployment	Programs,”	August	11,	2010.	
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SIGTARP-17-001 4 January 11, 2017 

85,000 People Who Earned Less Than 

$30,000 Were Turned Down for Hardest Hit 

Funds 

State	agencies	paid	by	Treasury	to	distribute	this	unemployment

assistance	turned	down	84,965	people	who	earned	less	than	$30,000	(as	

shown	in	Figure	1),	including	64,979	people	who	made	less	than	$20,000.	

SIGTARP	has	found	that	most	of	the	people	who	were	denied	Hardest	Hit	

funds	(53%)	earned	less	than	$30,000	(see	Figure	2).7

Figure 1: Hardest Hit Fund Homeowner Denials by State, as of June 30, 2016 

State Agency 

Denied Homeowners Earning Less Than 

$30,000

Florida 16,706 

Michigan 12,653 

California 10,032 

Georgia 7,861 

Arizona 6,801 

North Carolina 6,559 

South Carolina 5,350 

Ohio 4,133 

New Jersey 3,417 

Illinois 2,787 

Alabama 1,517 

Oregon 1,478 

Nevada* 1,293 

Kentucky 1,241 

Mississippi 1,158 

Tennessee 952 

Indiana 465 

Rhode Island 456 

DC 106 

Total 84,965 

* Data as of September 30, 2015 (the most recent data available). 

Source: SIGTARP analysis of state agency Hardest Hit Fund data for homeowner programs. Table 

excludes 927 people for whom state agency records did not provide income information. 

State	agencies	in	Florida,	Michigan,	California,	and	Georgia	turned	down	

the	largest	numbers	of	people	who	made	less	than	$30,000.		

 

7	State	agencies’	records	provided	to	SIGTARP	show	that	53%	of	all	homeowners	denied	for	Hardest	Hit	Fund	

dollars	(84,965	out	of	160,015)	earned	less	than	$30,000	a	year.	This	assistance	is	largely	unemployment	

assistance.	
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SIGTARP-17-001 5 January 11, 2017 

In 6 States (Including Ohio, North Carolina, and Indiana), 3 of 4 

People Turned Down for Hardest Hit Funds Earned Less Than 

$30,000, and Nearly 3 of 4 People in 6 Other States (Including 

Michigan, Georgia, Illinois, Kentucky, and Tennessee) 

Although	nationwide	53%	of	all	of	the	homeowners	denied	these	Federal	

dollars	earned	less	than	$30,000,	SIGTARP	found	that	in	12	of	the	19	

states,	more	than	70%	of	people	turned	down	for	these	Federal	funds	

earned	less	than	$30,000.	

Figure 2: People Denied Hardest Hit Fund Dollars, as of June 30, 2016 

Source: SIGTARP analysis of applicant data provided by the states. 

In	12	states,	70%	or	more	of	the	people	turned	down	earned	less	than	

$30,000,	as	shown	in	Figure	3.	People	who	earn	less	than	$30,000	are	

likely	to	fall	within	those	still	struggling	with	unemployment	and	

underemployment,	and	have	difficulties	keeping	their	home.		
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SIGTARP-17-001 6 January 11, 2017 

Figure 3: Percentage of Denied Homeowners Who Earned Less Than $30,000, by State 

Source: SIGTARP analysis of applicant data provided by the states. 

Of	the	people	who	were	turned	down	in	Ohio,	North	Carolina,	Mississippi,	

Alabama,	the	District	of	Columbia,	and	Indiana,	76‐80%	earned	less	than	

$30,000.	At	the	same	time,	the	state	agencies	gave	Hardest	Hit	Fund	

dollars	to	nearly	20,000	people	who	made	more	than	$70,000—including	

almost	6,000	people	making	more	than	$90,000.		

While	the	program	has	helped	many	in	Ohio	and	Michigan,	those	are	two	

states	where	high	percentages	of	people	turned	down	made	under	

$30,000—86%	in	Ohio	and	71%	in	Michigan.		

 The	Michigan	state	agency	turned	down	12,653	people	who	

earned	less	than	$30,000,	but	gave	Hardest	Hit	Fund	dollars	to	

1,176	people	who	earned	more	than	$90,000,	and	1,884	people	

who	made	between	$70,000	and	$89,999.		

 The	Ohio	state	agency	turned	down	4,133	people	for	Hardest	Hit	

Fund	dollars	who	earned	less	than	$30,000,	but	gave	those	dollars	

to	1,244	people	who	made	more	than	$70,000	(321	of	them	made	

more	than	$90,000).		
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SIGTARP-17-001 7 January 11, 2017 

While	state	agencies	may	want	to	help	people	with	these	higher	

incomes,	high	numbers	of	people	turned	away	who	earned	less	than	

$30,000	raises	questions	about	whether	these	programs	are	as	effective	

and	efficient	as	they	can	be	to	reach	those	people	who	are	the	hardest	hit.		
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SIGTARP-17-001 8 January 11, 2017 

High Percentages of People Turned Down for 

the Hardest Hit Fund Who Live in Cities Where 

General Motors Closed a Plant Earned Less 

Than $30,000 

State	agency	records	from	Michigan	and	Ohio	provided	to	SIGTARP	show	

that	high	percentages	of	the	people	being	turned	down	for	this	program	

in	cities	where	General	Motors	(“GM”)	closed	a	plant	or	laid	off	workers	

earned	less	than	$30,000.	The	closing	of	an	auto	plant	can	have	a	ripple	

effect,	including	layoffs	at	auto	parts	suppliers.	All	of	the	state	agencies	

report	to	Treasury	quarterly	on	the	number	of	people	living	in	every	city	

or	county	who	receive	these	funds.	This	information	is	publicly	released,	

but	no	one	releases	details	on	the	people	turned	down.		

SIGTARP	performed	a	zip	code	search	of	the	state	records	provided	to	

identify	where	people	earning	less	than	$30,000	lived	and	were	turned	

down	for	this	HHF	assistance.	That	search	revealed	that,	in	Michigan,	

many	of	those	people	live	in	cities	where	GM	closed	plants	or	laid	off	

workers,	as	seen	in	Figure	4:	

Figure 4: People Denied HHF in Michigan Cities Where GM Closed Plants or Laid off 

Workers: Homeowners Denied HHF Who Earned Less Than $30,000 

Source: SIGTARP analysis of Michigan applicant data. 
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SIGTARP-17-001 9 January 11, 2017 

In	Michigan,	state	records	provided	to	SIGTARP	show	that	in	cities	

where	GM	closed	plants	or	laid	off	workers,	the	Michigan	state	agency	

reported:		

 Nearly	5,000	people	living	in	the	Detroit	metropolitan	area	who

earned	less	than	$30,000	were	turned	down	for	HHF	dollars.	That

was	82%	of	all	people	in	the	Detroit	area	turned	down	for	HHF.	

 Of	the	almost	500	people	living	in	Flint	and	surrounding	areas	

who	were	turned	down	for	HHF	dollars,	407	of	them	(84%)	

earned	less	than	$30,000.	

 About	83%	of	the	people	living	in	the	Saginaw	area	who	were	

turned	down	for	HHF	dollars	earned	less	than	$30,000.	This	was	

more	than	260	people.		

 Two	out	of	every	three	people	(66%)	living	in	Grand	Rapids	and	

surrounding	areas	who	were	turned	down	for	HHF	dollars	earned	

less	than	$30,000.	This	was	nearly	250	people.		

 More	than	200	people	in	the	Lansing	area	(50	miles	west	of	Flint)	

who	earned	less	than	$30,000	were	turned	down	for	HHF	dollars.	

That	is	63%	of	the	people	in	the	Lansing	area	who	were	turned	

down.		

 More	than	100	people	in	Ypsilanti	and	surrounding	areas	who	

earned	less	than	$30,000	were	turned	down	for	HHF	dollars.	That

is	62%	of	all	people	in	the	Ypsilanti	area	that	were	turned	down	

for	HHF	dollars.	

GM	also	closed	plants	in	Ohio,	as	did	auto	parts	suppliers,	as	shown	in	

Figure	5,	below.	However,	one	major	plant	in	Moraine,	Ohio	was	

closed	three	years	before	this	program	launched.		
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SIGTARP-17-001 10 January 11, 2017 

Figure 5: People Denied HHF in Ohio Cities Where GM or Suppliers Closed Plants or 

Laid Off Workers: Homeowners Denied HHF Who Earned Less Than $30,000 

Source: SIGTARP analysis of Ohio applicant data. 

Ohio	state	agency	records	provided	to	SIGTARP	show:	

 GM	did	not	close	a	plant	in	Cleveland,	but,	according	to	media	

reports,	jobs	were	lost	when	auto	parts	suppliers	in	Cleveland	

closed,	including	for	example,	Accel	Performance	Group,	

Metalworks	Worldwide,	and	Shiloh	Industries.	More	than	600	

people	in	Cleveland	and	surrounding	areas	who	earned	less	

than	$30,000	were	turned	down	for	HHF	dollars.	That	means	

that	nearly	90%	of	Cleveland	residents	turned	down	for	HHF	

earned	less	than	$30,000.		

 More	than	200	people	in	Dayton	and	surrounding	areas	

(including	Moraine	and	Vandalia)	who	earned	less	than	

$30,000	were	turned	down	for	HHF	dollars.	That	means	that	

more	than	90%	of	Dayton‐area	residents	turned	down	for	

HHF	earned	less	than	$30,000.	Dayton	also	suffered	from	a	

loss	of	jobs	at	auto	parts	suppliers	like	Delphi.			

 Most	of	the	people	living	in	Findlay,	Lordstown,	Mansfield,	

and	Ontario	who	were	turned	down	for	HHF	dollars	earned	

less	than	$30,000.		
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SIGTARP-17-001 11 January 11, 2017 

Figure	6,	below,	shows	the	percentages	of	denied	workers	who	earned	

less	than	$30,000	in	Michigan	and	Ohio	cities	affected	by	GM	and	supplier	

plant	closures.	

Figure 6: Percentage of Denied Workers Who Earned Less Than $30,000, by City 

* Includes Dayton and nearby cities of Moraine and Vandalia, Ohio. Combined, these cities denied 238 homeowners 

who earned less than $30,000. 

Source: SIGTARP analysis of applicant data provided by Michigan and Ohio. 

With	such	high	percentages	of	people	who	earned	less	than	$30,000	being	

turned	down	for	this	program	in	cities	where	GM	closed	a	plant,	it	

becomes	imperative	to	know	why	these	people	were	turned	down,	as	this	

level	of	income	can	show	who	has	been	hit	hard	in	these	cities.
IMPROVING TARP’S INVESTMENT IN AMERICAN WORKERS

SIGTARP-17-001 12 January 11, 2017 

SIGTARP Could Not Determine from State 

Records Why People Earning Less Than 

$30,000 Were Turned Away, Which Could Be 

Easily Fixed 

State	agencies’	records	provided	to	SIGTARP	were	non‐existent,	missing	

or	incomplete,	about	why	the	state	agencies	turned	down	people	making	

less	than	$30,000.	Insufficient	records	make	assessment	of	the	basis	for	

turning	down	these	people	difficult.	Insufficient	records	hinder	

improvements	to	the	use	of	these	funds	by	those	most	in	need.	

Insufficient	records	hamper	determinations	that	the	money	is	not	being	

wasted.		

Some	state	agencies	were	unable	to	provide	SIGTARP	even	basic	

aggregate	information	about	the	reasons	why	they	denied	people	seeking	

these	Federal	funds.		

 A	Florida	official	told	SIGTARP	that	the	state	agency	could	not

provide	SIGTARP	a	listing	of	the	number	of	Americans	denied	and

the	reasons	why	they	were	denied,	despite	the	fact	that	SIGTARP

recommended	that	they	do	so	in	an	October	2015	report.		

 SIGTARP	found	that	state	agencies’	individual‐level	records	in	

Nevada,	South	Carolina,	and	Arizona,	are	mostly	blank	in	the	field	

that	stores	the	reason	why	each	person	was	denied.	

 The	Ohio	state	agency’s	records	list	no	reason	for	denying	3,602	

(87%)	of	the	4,133	American	workers	who	earned	less	than	

$30,000.		

 State	officials	in	Ohio,	Indiana	and	Illinois	told	SIGTARP	that	to	

determine	the	reasons	why	individuals	were	denied	would	require

a	manual	review	of	each	person’s	file.		

When	state	agency	records	listed	a	reason	why	each	person	earning	less	

than	$30,000	was	denied,	often	it	was	a	vague	statement	that	the	person	

was	ineligible,	raising	concerns	about	whether	the	eligibility	criteria	are	

all	necessary.	Criteria	adopted	at	the	beginning	of	the	program,	when	it	

was	not	known	how	slowly	this	money	would	flow	to	homeowners,	may	

not	make	sense	now	nearly	seven	years	later—and	with	an	additional	$2	

billion	in	funding.	Unnecessary	restrictions	that	serve	as	stumbling	blocks	

or	closed	doors	to	American	workers	should	be	removed	to	improve	

effectiveness	and	efficiency.	
IMPROVING TARP’S INVESTMENT IN AMERICAN WORKERS

SIGTARP-17-001 13 January 11, 2017 

To Level the Playing Field, States Can 

Remove Unnecessary Restrictions That: (1) Do 

Not Exist in Other States for These Dollars; 

and (2) Do Not Reflect the Reality of Working 

Class Americans 

With	the	additional	$2	billion	in	funding	Congress	approved	in	2015,	

along	with	unspent	funds	in	some	states,	this	program	will	be	more	

effective	and	efficient	if	there	is	a	fresh	look	at	the	criteria	that	should	

apply	today.	States	that	have	underperformed	in	distributing	the	money	

should	open	up	the	funnel	and	remove	any	bottlenecks	in	their	process.	

Even	states	that	have	been	distributing	the	money	could	open	up	the	

criteria	to	reach	more	workers	who	have	been	laid	off	or	saw	their	

paycheck	cut.	Using	Michigan	as	an	example,	12,653	people	earning	less	

than	$30,000	in	Michigan	were	turned	down,	mostly	because	they	were	

ineligible,	as	shown	in	Figure	7.		

Figure 7: Reasons Why 12,653* Michigan Workers Earning 

Less Than $30,000 Were Denied Hardest Hit Funds* 

Michigan Workers Denied

8,757 Borrower Ineligible 

1,371 Hardship Requirement 

1,259 Mortgage Ineligible 

840 Property Ineligible 

436 Not Participating 

(Investor/Servicer) 

47 No Reason Given 

* Detailed figures do not add to 12,653 because some homeowners 

were denied for more than one reason. 

Source: SIGTARP analysis of Michigan applicant data. 

There	are	another	12,522	people	in	Michigan	who	applied	but	later	had	

their	application	withdrawn	(by	the	agency	or	themselves),	maybe	

because	they	could	not	meet	one	or	more	criteria.	Others	may	not	have	

even	tried	to	apply	because	they	did	not	meet	the	criteria.		

Unfortunately,	these	vague	records	do	not	list	which	criteria	the	person	

did	not	meet,	making	it	difficult	from	just	the	program	data	to	see	if	

certain	criteria	have	become	a	stumbling	block	or	closed	door	for	many	

homeowners.	The	Michigan	state	agency,	and	any	agency	that	lists	

“borrower	ineligible”	as	a	reason	for	denying	someone,	should	provide	

more	detail	in	their	records.	Once	the	state	agency	records	the	criteria	the	

person	did	not	meet,	the	agency	and	Treasury	should	implement	
IMPROVING TARP’S INVESTMENT IN AMERICAN WORKERS

SIGTARP-17-001 14 January 11, 2017 

SIGTARP’s	October	2015	recommendation	to	analyze	trends	to	see	if	

criteria	are	too	restrictive.	

Even	with	poor	records	on	why	people	earning	less	than	$30,000	have	

been	turned	away,	trend	analysis	can	show	simple	fixes	that	states	can	

make	to	increase	the	flow	of	this	money.	The	first	fix	is	to	level	the	playing	

field	by	eliminating	criteria	in	that	state	that	do	not	exist	for	homeowners	

in	other	states.	The	second	fix	is	to	eliminate	criteria	in	that	state	that	do	

not	reflect	the	reality	of	the	working	class	in	that	state.	

As an example, Hardest Hit Fund Michigan can remove some criteria

that do not exist in other states for these same funds and that do not

reflect the reality of workers.		

Hardest	Hit	Fund	California	has	provided	two	times	more	Hardest	Hit	

Funds	dollars	than	any	other	HHF	state.	While	Michigan	has	been

providing	these	dollars	to	some,	96%	of	the	workers	turned	away	did	not	

meet	one	or	more	criteria.	This	raises	the	question	of	whether	all	of	the	

criteria	are	necessary	going	forward.	Unlike	Ohio,	Michigan	had	not	given	

out	all	of	the	funds	before	Congress	approved	the	additional	money.	

Why should it matter that a Michigan worker received unemployment

or saw their paycheck cut “in the last 12 months,” when workers in

Arizona do not have to meet that same timeframe to receive these

same dollars?

The	Michigan	state	agency	prohibits	workers	from	receiving	Hardest	Hit	

funds	to	help	pay	their	mortgage	if	they	received	unemployment	benefits	

or	saw	their	paycheck	cut	more	than	12	months	ago.	Most	states	do	not	

put	this	timing	restriction	on	a	homeowner	to	get	Hardest	Hit	Funds.	It	

leads	to	an	unleveled	playing	field	if	a	worker	in	Arizona	who	saw	their	

paycheck	get	cut,	or	who	received	unemployment	benefits	more	than	a	

year	ago,	can	receive	these	funds,	while	a	worker	in	Michigan	would	be	

prohibited.		

The	reality	for	American	workers	is	that	unemployment	lasts	a	long	time.	

According	to	the	Bureau	of	Labor	Statistics,	the	national	average	length	of	

unemployment	is	27	weeks.	But	state	unemployment	benefits	in	Michigan	

only	last	14	to	20	weeks.	The	Michigan	requirement	does	not	reward	a	

responsible	worker	whose	paycheck	was	cut	more	than	one	year	ago	and	

has	exhausted	unemployment	benefits,	savings,	family	help,	or	low‐

paying	part‐time	work	to	pay	their	mortgage.	With	a	27‐week	average	

unemployment,	at	some	point	even	the	most	self‐sufficient	run	out	of	

options.		
IMPROVING TARP’S INVESTMENT IN AMERICAN WORKERS

SIGTARP-17-001 15 January 11, 2017 

Why should workers in Michigan have to suffer a 20% pay cut to

receive these funds, while a worker in Florida and Oregon only has to

suffer a 10% pay cut and a worker in California, Arizona and Indiana

does not have to show any specific percentage?

Michigan	has	criteria	to	receive	Hardest	Hit	Funds	that	an	

underemployed	worker	must	have	suffered	a	20%	cut	in	income,	which	is	

more	restrictive	than	in	other	states.	For	example,	an	underemployed	

worker	in	California,	Arizona,	and	Indiana	does	not	have	to	show	any	

specific	percentage	pay	cut.	Underemployed	workers	in	seven	other	

states	can	receive	Hardest	Hit	Fund	dollars	showing	less	than	a	20%	cut	

in	income.8	In	other	words,	10	other	states	determined	that	it	was	not	

necessary	for	an	underemployed	worker	to	show	a	20%	or	more	pay	cut	

to	receive	Hardest	Hit	funds,	raising	concerns	that	this	criteria	creates	an	

unleveled	playing	field	for	Michigan	workers.	

The	reality	is	that	there	are	so	many	underemployed	American	workers.	

Of	the	19	states	in	the	Hardest	Hit	Fund,	13	of	them	(including	Michigan)	

have	above‐average	rates	of	underemployment.	The	Bureau	of	Labor	

Statistics	does	not	measure	underemployment	by	the	percentage	of	lost	

wages	or	salary,	but	instead	as	“those	working	less	than	35	hours	per	

week	who	want	to	work	full	time,	are	available	to	do	so,	and	gave	an	

economic	reason	(their	hours	had	been	cut	back	or	they	were	unable	to	

find	a	full‐time	job)	for	working	part	time,”	calling	them	“involuntary	

part‐time	workers.”9	This	figure	may	not	account	for	full	time	workers	

who	saw	a	pay	cut.		

Why should Michigan workers be disqualified if their mortgage

payment is more than 45% of their income?		

This	requirement	may	be	well	intentioned,	but	may	not	always	match	the	

reality	of	the	working	class	who	are	suffering	from	unemployment	and	

may	be	using	much	of	whatever	income	they	have	to	pay	their	mortgage.	

The	Michigan	state	agency’s	intent	for	this	criteria	is	that	the	person	

“have	income	necessary	to	sustain	future	payments,”	defined	as	a	

mortgage	payment	less	than	or	equal	to	45%	of	the	person’s	gross	

income.	The	reality	for	many	is	that	they	do	not	have	enough	income	to	

make	future	payments,	and	any	income	they	have	may,	in	large	part,	go	to	

 

8	Florida	and	Oregon	require	a	10%	pay	cut;	Alabama,	Nevada,	New	Jersey,	Mississippi	and	Kentucky	require	

a	15%	pay	cut.		 9	The	Bureau	of	Labor	Statistics	calculates	the	underemployment	rate	(the	“U‐6”	labor	underutilization	rate)	

as	including	unemployed	workers,	part‐time	workers	who	want	to	work	full	time	but	their	hours	were	cut	

back	or	they	were	unable	to	find	a	full‐time	job,	marginally	attached	workers	who	want	to	work	but	are	not	

looking	for	work,	and	discouraged	workers,	who	believe	there	are	no	jobs	available	to	them	and	have	given	

up	looking	as	a	result.	
IMPROVING TARP’S INVESTMENT IN AMERICAN WORKERS

SIGTARP-17-001 16 January 11, 2017 

pay	their	mortgage	payment	to	save	their	home.	But	that	is	precisely	

where	a	stopgap	measure	program	like	HHF	steps	in.	The	whole	point	is	

to	help	pay	an	unemployed	worker’s	mortgage	payment	for	a	short	time	

until	they	can	hopefully	find	a	job	and	get	back	their	income.	

Sustainability	is	not	Treasury’s	stated	goal	for	the	Hardest	Hit	Fund,	even	

though	it	is	a	stated	goal	for	the	Home	Affordable	Modification	Program	

(”HAMP”).	But	HAMP	is	designed	for	sustainability	by	contracting	with	

mortgage	servicers	to	permanently	lower	a	person’s	interest	rate	on	their	

mortgage,	and	make	TARP	payments	over	six	years.	HHF	is	short	term,	

sometimes	a	one‐time	payment,	and	typically	no	more	than	two	years	of	

monthly	payments.	It	most	often	leads	to	no	permanent	change	to	the	

mortgage.	Treasury’s	guidelines	to	state	agencies	for	HHF	have	no	

requirement	of	sustainability.	

HHF	complements	state	unemployment	benefits	that	do	not	have	

sustainability	requirements	such	as	the	person	has	to	show	they	have	

income	to	make	future	payments.	Typically,	a	state	agency	requires	that,	

in	order	to	get	HHF	using	unemployment	as	the	hardship,	the	person	has	

to	be	eligible	for	state	unemployment	benefits.	The	Hardest	Hit	Fund	is	an	

investment	in	these	workers	and	their	neighborhoods	by	providing	a	

temporary	safety	net	that	prevents	foreclosures	until	they	can	find	a	job.		

Why does a Michigan worker facing an upcoming layoff or pay cut

have to wait until they are laid off and become delinquent to qualify?

The	California	state	agency	allows	a	worker	to	qualify	for	these	funds	if	

they	are	going	to	face	an	upcoming	hardship	that	could	cause	them	to	

default	on	their	mortgage.	Opening	up	Michigan	and	Ohio	to	consider	an	

upcoming,	involuntary	hardship	would	allow	the	workers	at	the	GM	

plants	in	Lansing,	Michigan	or	Lordstown,	Ohio	(where	GM	announced	

layoffs	for	January	2017),	or	workers	at	parts	suppliers	who	may	also	be	

laid	off,	to	work	through	the	months‐long	application	process	now	and	

receive	help	by	February,	the	first	month	after	the	layoffs.	
IMPROVING TARP’S INVESTMENT IN AMERICAN WORKERS

SIGTARP-17-001 17 January 11, 2017 

Why should a Michigan worker have to wait until they are

delinquent on their mortgage to qualify when workers who are

current on their mortgage in other states like Indiana, Oregon, and

Tennessee qualify for these funds?

To	qualify	for	Hardest	Hit	funds,	workers	in	Michigan	must	be	delinquent	

on	their	mortgages,	property	taxes,	or	condominium	fees.10	Being	current	

on	the	mortgage	will	not	disqualify	a	worker	in	Indiana,	Oregon	and	

Tennessee	for	these	dollars.	Indiana,	Oregon,	and	Tennessee	have	low	

numbers	of	people	turned	away	who	earn	less	than	$30,000.	The	reality	

is	that	some	responsible	homeowners	have	stretched	their	dollar	to	keep	

their	mortgage	current	but	may	be	running	out	of	savings	or	other	means.	

Removing	criteria	not	present	for	homeowners	in	other	states	ensures	

that	there	is	a	level	playing	field	for	these	dollars.	It	also	can	open	the	

program	up	to	people	earning	less	than	$30,000.		

 

10	The	Michigan	state	agency	emphasizes	on	its	home	page	and	its	HHF	“Frequently	Asked	Questions”	page	

that	homeowners	must	be	“delinquent”	to	apply	for	HHF	assistance.	Although	an	addendum	(on	page	

seven)	to	the	agency’s	FAQ	entitled	“Information	for	Bankruptcy	Clients”	subsequently	states	that	

homeowners	need	not	be	delinquent	on	their	mortgage,	that	clarification	may	easily	be	missed	by	many	

homeowners	(and	housing	counselors),	and	discourage	homeowners	who	are	not	delinquent	on	their	

mortgages	from	applying.	Because	the	agency	was	unable	to	provide	specific	reasons	each	homeowner	was	

denied,	SIGTARP	could	not	determine	whether	the	Michigan	state	agency	denied	HHF	assistance	to	

homeowners	who	were	current	on	their	mortgages.	
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SIGTARP-17-001 18 January 11, 2017 

Conclusion 

As	an	investment	in	American	workers,	TARP’s	Hardest	Hit	Fund	

provides	a	temporary	safety	net	to	save	the	homes	of	now‐unemployed	or	

underemployed	workers	in	the	rust	belt,	south,	and	other	hard‐hit	areas	

of	the	country.	The	program	has	helped	more	than	a	quarter	of	a	million	

people,	but	there	has	been	no	reporting	on	the	people	denied	entry	into	

the	program.	SIGTARP	has	found	that	most	of	the	homeowners	who	were	

denied	Hardest	Hit	funds	earned	less	than	$30,000,	calling	into	question	

whether	the	program	is	effective	in	reaching	those	hardest	hit.	In	six	

states	(including	Ohio,	North	Carolina,	and	Indiana)	three	out	of	four	

people	denied	entry	into	the	Hardest	Hit	Fund	made	less	than	$30,000.	

Nearly	three	out	of	every	four	people	in	six	other	states	(including	

Michigan,	Georgia,	Illinois,	Kentucky,	and	Tennessee)	who	were	denied	

entry	into	the	Hardest	Hit	Fund	made	less	than	$30,000.		

TARP	was	a	bail	out	for	companies	like	General	Motors	in	areas	like	

Detroit,	Cleveland,	and	Flint,	but	Congress	also	required	that	TARP	funds	

go	to	homeowners,	including	American	workers	who	continue	to	feel	the	

effects	of	the	financial	crisis	and	the	recession	that	followed.	In	many	

states,	the	money	has	been	slow	to	flow.	The	need	for	the	program	is	so	

great	that	a	bipartisan	effort	by	Congress	added	an	additional	$2	billion	in	

December	2015.	Treasury	extended	the	program	three	years	until	

December	2020.	More	can	be	done	to	make	sure	those	American	workers	

who	are	hardest	hit	get	this	help.	

SIGTARP	found	that	84,965	out	of	160,015	people	denied	for	Hardest	Hit	

Fund	dollars	earned	less	than	$30,000	a	year,	including	64,979	people	

who	made	less	than	$20,000	a	year.	In	12	states,	mostly	in	the	rust	belt	

and	south,	70	percent	or	more	of	the	people	turned	down	for	the	Hardest	

Hit	Fund	made	less	than	$30,000.	At	the	same	time,	nearly	20,000	people	

who	made	more	than	$70,000,	including	6,000	people	making	more	than	

$90,000,	received	Hardest	Hit	Fund	dollars.		

Out	of	19	states,	with	the	exception	of	highly‐populated	California	and	

Florida,	Treasury	set	aside	the	most	dollars	for	Ohio	and	Michigan.	While	

the	program	has	helped	many	in	Ohio	and	Michigan,	those	are	two	states	

where	high	percentages	of	people	turned	down	made	under	$30,000—

86	percent	in	Ohio	and	71	percent	in	Michigan.		

SIGTARP	found	high	percentages	of	people	turned	down	for	the	Hardest	

Hit	Fund	who	earned	less	than	$30,000	in	cities	where	General	Motors—

which	received	$50	billion	in	TARP	funds—or	its	suppliers	closed	plants	

or	laid	off	workers:		
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SIGTARP-17-001 19 January 11, 2017 

 82%	of	the	people	in	the	Detroit	area	turned	down	made	less	

than	$30,000—that	amounts	to	4,829	people	

 89%	of	the	people	in	the	Cleveland	area	turned	down	made	less	

than	$30,000	(619	people)	

 84%	of	the	people	in	the	Flint	area	turned	down	made	less	than	

$30,000	(407	people)	

 83%	of	the	people	in	the	Saginaw	area	turned	down	made	less	

than	$30,000	(266	people)	

 91%	of	the	people	in	the	Dayton	area	turned	down	made	less	than

$30,000	(238	people)	

The	expectation	for	a	program	that	targets	unemployed	and	

underemployed	workers	should	be	that	many	struggling	to	save	their	

homes	will	have	lower	incomes.	The	fact	that	so	many	turned	down	had	

lower	incomes	requires	a	deeper	look	into	why	they	were	turned	down.		

State	agencies’	records	provided	to	SIGTARP	were	non‐existent,	missing	

or	incomplete	about	why	the	state	agencies	turned	down	these	people	

making	less	than	$30,000.	There	may	be	valid	reasons	why	some	of	these	

people	were	denied,	but	it	is	impossible	to	know	when	state	agencies	

managing	this	program	do	not	keep	records	that	detail	specifically	why	

each	person	was	denied.	That	oversight	is	unjustifiable	and	should	be	

remedied	so	appropriate	action	can	be	taken	to	get	this	money	to	the	

working	class	still	feeling	the	impact	of	the	crisis	and	recession.		

This	program	has	a	lot	more	potential	to	provide	a	safety	net	in	certain	

communities	until	full‐time	jobs	return,	but	that	potential	needs	to	be	

unlocked	now.	Despite	GM	returning	to	profitability,	GM	and	others	have	

closed	plants	in	the	past	year,	and	more	than	2,000	GM	workers	will	be	

laid	off	at	plants	in	Michigan	and	Ohio.		

The	best	way	to	unlock	the	full	potential	of	the	program	is	to	remove	too‐

stringent	criteria	that:	(1)	do	not	reflect	the	reality	of	the	working	class	in	

that	state;	or	(2)	do	not	apply	to	homeowners	in	other	states	to	get	these	

funds.	For	example,	a	Michigan	worker	should	not	be	turned	down	for	the	

Hardest	Hit	Fund	just	because	they	received	unemployment	benefits	(or	

saw	their	paycheck	cut)	more	than	12	months	ago,	when	a	California	

homeowner	does	not	have	that	same	restriction	for	entry	into	the	

Hardest	Hit	Fund.	There	should	be	a	level	playing	field	for	homeowners	

seeking	help	through	this	program.	This	12‐month	timing	restriction	is	

also	inconsistent	with	the	new	normal	of	unemployment—that	it	lasts	a	

long	time—and	it	does	not	reward	a	responsible	Michigan	homeowner	
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who	made	ends	meet	for	more	than	a	year	after	receiving	

unemployment	benefits,	but	has	now	run	out	of	options.		

SIGTARP	found	other	criteria	in	certain	states	for	this	program	that	are	

more	restrictive	than	others.	For	example,	a	requirement	in	Michigan	and	

some	other	states	to	show	a	20%	pay	cut	in	order	to	qualify	as	

“underemployed”	is	either	lower	or	non‐existent	in	other	states	for	this	

same	program.	SIGTARP	also	found	criteria	in	certain	states	for	this	

program	that	do	not	match	the	reality	of	unemployed	workers.	For	

example,	a	requirement	that	the	person	make	sufficient	income	to	afford	

their	mortgage	in	the	future	may	not	be	realistic	now.	The	reality	is	that	

this	is	temporary	help	while	the	person	looks	for	a	full‐time	job,	at	which	

point	the	hope	is	that	they	will	make	enough	income	to	afford	their	

mortgage.	Program	criteria	like	these	and	others	may	have	been	well‐

intentioned,	designed	to	ensure	there	was	enough	money	to	spread	

around.	Nearly	seven	years	later,	with	billions	of	dollars	left,	and	the	

money	slow	to	flow,	state	agencies	should	determine	whether	each	

program	criteria	is	really	necessary.	

Even	good	programs	can	be	better.	The	Hardest	Hit	Fund	can	be	more	

effective	and	efficient	so	that	the	state	agencies	can	help	more	of	

America’s	working	class	save	their	home.	That	is	a	goal	worth	striving	for,	

but	it	takes	change,	including	unlocking	the	full	potential	of	this	program	

by	deleting	unnecessary	restrictions.	
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Recommendations 

1.	 To	improve	the	effectiveness	of	distributing	Hardest	Hit	Fund	dollars	

to	help	unemployed	and	other	homeowners	save	their	homes	and	level	

the	playing	field	for	homeowners	across	states,	Treasury	and	state	

agencies	should	eliminate	unnecessary	program	eligibility	criteria	that	

prevent	low‐income	homeowners	from	getting	Hardest	Hit	Fund	

assistance,	including	those	criteria	that	do	not	reflect	the	reality	of	the	

state’s	working	class	and	those	that	do	not	apply	to	homeowners	in	other	

states	for	these	Federal	dollars.	

2.	 To	help	America’s	working	class	save	their	homes,	Treasury	and	state	

agencies	should	open	up	eligibility	to	the	Hardest	Hit	Fund	to	workers	

subject	to	actual	or	announced	layoffs,	plant	closings,	or	other	similar	

reductions‐in‐force	so	that	they	do	not	have	to	wait	until	they	actually	fall	

behind	on	their	mortgage	payments	to	become	eligible	for	Hardest	Hit	

Fund	assistance.	

3.	 Treasury	should	require	state	agencies	to	keep	detailed	records	on	

why	they	denied	each	person	for	Hardest	Hit	Fund	assistance,	including	

the	specific	program	criteria	not	met.	
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Management Comments and SIGTARP’s 

Response 

In	response	to	a	draft	of	this	report,	Treasury	provided	a	letter	and	some	

technical	comments,	which	SIGTARP	addressed	where	applicable.	In	its	

response,	Treasury	did	not	address	SIGTARP’s	findings,	but	said	it	

“...appreciates	SIGTARP’s	analysis	and	is	closely	examining	[SIGTARP’s]	

recommendations.”	
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Appendix A – Objective, Scope, and 

Methodology 

SIGTARP	performed	this	evaluation	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.	SIGTARP	initiated	this	evaluation	as	part	of	SIGTARP’s

continuing	oversight	of	Treasury’s	Hardest	Hit	Fund	(“HHF”)	program.	

The	evaluation’s	objective	was	to	assess	the	denial	of	homeowners	

applying	for	Hardest	Hit	Fund	assistance.	The	scope	of	this	evaluation	

covered	HHF	homeowner	assistance	programs	for	all	19	state	agencies.	

Given	the	limitations	of	the	records	kept	by	state	agencies,	the	scope	of	

this	evaluation	largely	focused	on	incomes	of	homeowners	who	applied	

and	were	denied	HHF	assistance.	SIGTARP	conducted	this	evaluation	

from	February	2016	through	December	2016	in	Washington,	D.C.	

SIGTARP	obtained	and	analyzed	data	from	each	state	agency	about

individual	homeowners	who	were	denied	HHF	unemployment	assistance	

as	of	June	30,	2016	(the	Nevada	state	agency	only	provided	homeowner	

denial	data	as	of	September	30,	2015).	Because	state	agencies	denied	

many	homeowners	before	they	verified	the	homeowners’	reported	

incomes,	where	available,	SIGTARP	used	the	earned	incomes	(wages,	self‐

employment	income,	and	rental	income)	reported	by	applicants	and	co‐

applicants	in	their	applications.	SIGTARP	also	obtained	and	analyzed	

state	agency	data,	where	available,	regarding	the	reasons	why	

homeowners	were	denied	HHF	assistance.	SIGTARP	also	held	interviews	

with	state	agencies	to	gain	an	understanding	of	their	record	keeping	for	

maintaining	data	on	homeowners	denied	for	the	program.	

SIGTARP	also	analyzed	state	agency	quarterly	performance	data,	and	

performed	a	limited	review	of	state	agency	agreements	with	Treasury	

and	additional	detailed	program‐level	eligibility	criteria,	policies	and	

procedures.	In	addition,	SIGTARP	collected	information	regarding	

automotive	industry	plant	closures	in	Michigan	and	Ohio.		

SIGTARP	conducted	this	evaluation	in	accordance	with	the	“Quality	

Standards	for	Inspection	and	Evaluation,”	January	2012	edition,

established	by	the	Council	of	the	Inspectors	General	on	Integrity	and	

Efficiency.	Those	standards	require	that	SIGTARP	plan	and	perform	the	

evaluation	to	obtain	evidence	sufficient	to	provide	a	reasonable	basis	for	

findings	and	conclusions	based	on	the	evaluation	objectives.	SIGTARP	

believes	that	the	evidence	obtained	provides	a	reasonable	basis	for	the	

findings	and	conclusions	based	on	the	evaluation	objectives.		
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Limitations on Data 

SIGTARP	relied	on	state	agencies	to	provide	applicant‐level	data	and	data	

concerning	why	applicants	were	denied.	In	many	cases	the	applicant	data	

the	state	agencies	provided	contained	blank	fields,	as	noted	in	the	report.	

SIGTARP	also	relied	on	Treasury’s	Quarterly	Performance	Reports.	It	is	

possible	that	the	documentation	provided	by	state	agencies	to	SIGTARP	

did	not	reflect	a	comprehensive	response	to	SIGTARP’s	data	request,	

potentially	limiting	SIGTARP’s	review.	

Use of Computer-Processed Data 

SIGTARP	relied	on	computer‐processed	data	for	this	evaluation.	

Specifically,	SIGTARP	relied	on	the	state	agencies’	data	provided	to	

SIGTARP	to	determine	the	numbers	and	percentages	of	denied	

homeowners	and	their	incomes.	SIGTARP	relied	on	Treasury’s	quarterly	

performance	reports	to	determine	the	numbers	and	percentages	of

approved	homeowners	and	their	incomes.	SIGTARP	did	not	validate	the	

accuracy	of	the	underlying	data	provided	by	Treasury	or	the	state	

agencies.		

Internal Controls 

To	address	the	reporting	objective	in	this	evaluation,	SIGTARP	performed	

a	limited	review	of	internal	controls	by	interviewing	state	agency	officials	

and	by	reviewing	selected	state	agency	agreements	with	Treasury	and	

state	agency	eligibility	criteria,	policies	and	procedures.	

Prior Coverage 

SIGTARP	has	covered	the	HHF	program	in	five	previous	reports.	On	

April	12,	2012,	SIGTARP	released	an	audit	report	titled,	“Factors	Affecting	

Implementation	of	the	Hardest	Hit	Fund	Program.”	On	April	21,	2015,	

SIGTARP	released	an	audit	report	titled,	“Treasury	Should	Do	Much	More	

to	Increase	the	Effectiveness	of	the	TARP	Hardest	Hit	Fund	Blight	

Elimination	Program.”	On	October	6,	2015,	SIGTARP	released	an	

evaluation	report	titled,	“Factors	Impacting	the	Effectiveness	of	Hardest	

Hit	Fund	Florida.”	On	June	16,	2016,	SIGTARP	released	an	audit	report	

titled,	“Treasury’s	HHF	Blight	Elimination	Program	Lacks	Important	

Federal	Protections	Against	Fraud,	Waste,	and	Abuse.”	On	September	9,	

2016,	SIGTARP	released	an	audit	report	titled,	“Waste	and	Abuse	in	the	

Hardest	Hit	Fund	in	Nevada.”	SIGTARP	also	issued	an	alert	letter	on		
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SIGTARP-17-001 25 January 11, 2017 

December	14,	2015,	that	addressed	a	risk	related	to	diverting	TARP	

funds	to	demolish	lived‐in	properties,	which	could	undermine	the	success	

of	HHF’s	Blight	Elimination	Program.	
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Appendix B – Acronyms and Abbreviations 

GM	 General	Motors		

HAMP	 Home	Affordable	Modification	Program	

HHF	 Housing	Finance	Agency	Innovation	Fund	for	the	Hardest	Hit	

Housing	Markets	(also	“Hardest	Hit	Fund”)	

State	agency		 State	housing	finance	agency	

TARP	 Troubled	Asset	Relief	Program	

Treasury	 U.S.	Department	of	the	Treasury	
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SIGTARP-17-001 27 January 11, 2017 

Appendix C – Evaluation Team Members 

This	evaluation	was	conducted	and	the	report	was	prepared	under	the	

direction	of	Jenniffer	F.	Wilson,	Deputy	Special	Inspector	General	for	

Audit	and	Evaluation,	and	Christopher	Bosland,	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	evaluation	and	contributed	to	the	

report	include	Craig	Meklir,	Kamruz	Zaman,	William	Saunders,	and	Jeff	

Banks.	
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SIGTARP-17-001 28 January 11, 2017 

Appendix D – Management Comments 
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SIGTARP-17-001 29 January 11, 2017 
SIGTARP-17-001 January 11, 2017 

SIGTARP Hotline 

If you are aware of fraud, waste, abuse, mismanagement, or misrepresentations associated with the Troubled 

Asset Relief Program, please contact SIGTARP. 

By UOnline Form: Uwww.SIGTARP.govU 

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, DC 20220

Press Inquiries 

If you have any inquiries, please contact our Press Office: 

Robert Sholars 

Director of Communications 

Robert.Sholars@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 Uwww.SIGTARP.govU.