SIGTARP-19-001 March 7, 2019

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

Audit Report

Travel and Conference Charges to 

The Hardest Hit Fund That Violated 

Federal Regulations
SIGTARP-19-001 March 7, 2019

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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

March 7, 2019

MEMORANDUM FOR: Honorable Steven T. Mnuchin – Secretary of the Treasury

/signed/

FROM: Honorable Christy Goldsmith Romero,

Special Inspector General for the Troubled Asset Relief Program

SUBJECT: Travel and Conference Charges to the Hardest Hit Fund that 

Violated Federal Regulations (SIGTARP 19-001)

We are providing this audit report for your information and use. SIGTARP found, among 

other things, that state agencies wasted TARP dollars and used Hardest Hit Funds to pay 

for travel and conference costs prohibited by Federal cost regulations.

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

conducted this audit (engagement code 038) under the authority of the Emergency 

Economic Stabilization Act of 2008, which also incorporates certain 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 me at any time.
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SIGTARP-19-001 i March 7, 2019

Executive Summary

This is SIGTARP’s third audit finding waste and other misuse of TARP dollars by state 

agencies on their administrative expenses—$411,658 in travel and conference costs in this 

audit—in TARP’s Hardest Hit Fund (HHF), an ongoing foreclosure prevention program. 

With more than a $1 billion budget for state agency operating and other costs (called 

“administrative expenses”) to administer HHF funds, it is critical that state agencies spend 

these taxpayer dollars only as Congress intended. 

SIGTARP found that several state agencies treated the Hardest Hit Fund like a Federal 

government deep pocket to pay for travel and conference costs prohibited by Federal cost 

regulations. In several instances, the state agencies committed waste and abuse. For 

example, state agencies charged TARP for a motivational speaker who spoke on Motivation 

by Chocolate, high-rate luxury hotels, traveling to resort destinations to attend annual 

conferences of trade associations and other groups, extra nights beyond the conferences, 

social activities, trips to Las Vegas, and a baseball game. SIGTARP also found that some 

state agencies inappropriately shifted 100% of certain travel costs to the Hardest Hit Fund, 

rather than splitting them between HHF and other programs, as required by the 

regulations.

SIGTARP found that, although Treasury designed the program in 2010 to curb misuse of 

TARP dollars, subsequently Treasury lacked effective oversight. When Treasury created 

HHF in 2010, it took steps designed to ensure that HHF complied with TARP law and that 

funds reached their intended recipient. Treasury set a travel budget, and applied the 

Federal cost regulations that apply to grants. Treasury also set strict limits on TARP dollars 

for housing counselor expenses, not allowing broad foreclosure prevention or debt relief

counseling, but only those related to triage for HHF and back end counseling. 

Subsequently, Treasury did not effectively enforce the Federal cost regulations’ general 

tests (i.e., a cost must be necessary, reasonable, and allocable to HHF), specific 

requirements for travel or conferences, or the prohibition on social activity costs. SIGTARP 

found that many state agencies did not have, or enforce, internal controls necessary to 

ensure compliance with Federal cost regulations. Internal controls and effective oversight 

could have ensured that state agencies spent TARP dollars only as Congress intended, and 

prevented waste, abuse, and misuse of TARP dollars. 

When charging TARP to host conferences (as state agencies in North Carolina and Ohio 

did), the Federal regulations require discretion and judgment in ensuring that conference 

costs are appropriate, necessary, and managed in a way that minimizes costs to the Federal 

award. The Ohio agency’s decision in 2014—right before closing the program to new 

homeowners—to charge TARP more than $7,000 to host housing counselor conferences at 

zoos, including animal presentations, zoo admissions, and a park ranger, violated the 

regulations. So did the Ohio agency’s decision after the program closed to new homeowner 

applications in 2014 to increase significantly the number of officials traveling to training 

conferences. The North Carolina agency violated the regulations and Treasury’s limitation 

on housing counselor costs by, in 2010, charging TARP to host an annual housing counselor 
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SIGTARP-19-001 ii March 7, 2019

conference before any homeowner had received $1—including an evening reception 

with a carved beef station and a uniformed chef, cake bites, strawberry shortcake martinis, 

mousse shooters of the season, and other prohibited costs. Between 2010 and 2013, and 

again in 2016 after Congress authorized additional TARP funds, the North Carolina agency 

spent nearly $130,000 on annual housing counselor conferences, including, for example, 

$2,500 related to a motivational speaker on Motivation by Chocolate. The charges violated 

Federal cost regulations.

SIGTARP also identified travel that lacked the documentation required to charge Federal 

funds under the applicable Federal cost regulations. A state agency cannot simply say that 

travel should be charged to HHF. The Federal regulations require documentation that 

justifies that the participation of the individual is necessary for HHF, and that the travel is 

reasonable, and consistent with the state agency’s policies. SIGTARP found many instances 

where state agencies did not have the documentation required under the Federal 

regulations. For example:

 Two top officials at the Florida agency charged travel for more than a dozen 

conferences each, often at luxury hotels, beaches, and other resort destinations, 

without documentation justifying that each official’s participation was necessary 

for HHF. SIGTARP reported in 2015 that the Florida agency was one of the most 

underperforming state agencies in HHF, providing HHF to only 20% of 

applicants, the lowest of any state agency. 

 The Georgia agency charged TARP for its Deputy Executive Director to travel for

non-HHF related events 10 times, including staying at the Tribeca Grand Hotel 

for a bond pricing conference in New York. SIGTARP found that the 

documentation did not justify that the individual’s participation was necessary 

for HHF. In 2017, SIGTARP reported that the Georgia agency had mismanaged 

the Hardest Hit Fund, withholding funds from homeowners despite repeated 

warnings of overly strict criteria, unnecessary red tape, and a difficult and 

burdensome homeowner application process. 

 SIGTARP found that the documentation did not justify how each Indiana agency 

official’s participation was necessary for HHF on travel, including a Federal 

Reserve conference in New York, and a HUD meeting in Chicago. 

 SIGTARP found that the documentation did not justify that the participation of 

California contractors was necessary for HHF at conferences in Las Vegas, the St. 

Regis Monarch Beach Resort, and in New York.

SIGTARP also found travel that violated the state agency’s policies. For example, officials at 

agencies in Kentucky, Indiana, Ohio, and Arizona violated state agency policies by charging 

TARP for luxury hotels at high rates for meetings with Treasury in Washington, D.C. 

Officials from other state agencies found hotels at or near the GSA rate for the same 

Treasury meeting. Two senior Ohio agency officials stayed at the W Hotel paying $423 and 
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SIGTARP-19-001 iii March 7, 2019

$315 per night, violating the agency’s policy to use the U.S. per diem rate ($224), while a 

junior Ohio official on the same trip stayed at a hotel with a rate of $170 per night.

Treasury has begun changing its oversight process in response to previous SIGTARP 

reports. However, that does not relieve Treasury from its responsibility to recover costs 

that SIGTARP has identified as waste, abuse, misuse, and in violation of Federal cost 

regulations. In the course of this audit, after SIGTARP officials inquired about specific 

expenses, some state agencies repaid at least $15,567 to Treasury. However, for TARP and 

taxpayers to be made whole, Treasury should require the state agencies to repay the costs 

that SIGTARP questioned. SIGTARP is making 18 recommendations to recover $396,091

identified as waste, abuse, misuse, and in violation of Federal cost regulations that have not 

been recovered, and to strengthen Treasury’s oversight of HHF and state agencies’ internal 

controls. Treasury responded that it will implement one recommendation and that it will 

consider the others.

Taxpayers and the intended recipients of TARP dollars under this program should not 

shoulder the burden of dollars lost to misuse. There is no better way to deter the misuse of 

TARP dollars than for Treasury to require that misused TARP dollars be repaid. TARP 

dollars returned can be recycled back into the program or repaid to the Federal 

government. 

There is still time for Treasury to make a difference: state agencies are budgeted to spend 

at least $206 million in TARP dollars for administrative expenses over the next two years. 

It is critical that Treasury and state agencies ensure that these taxpayer dollars are spent 

only as Congress intended. Any dollar wasted, misused, or spent inappropriately is one less 

dollar for homeowners or taxpayer savings.
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SIGTARP-19-001 iv March 7, 2019

Table of Contents

Executive Summary ............................................................................................................ i

Table of Contents.............................................................................................................. iv

Background ........................................................................................................................ 1

Treasury Lacked Effective Oversight Over State Agency Expenses, But Has 

Begun Taking Steps to Increase Oversight in Response to SIGTARP 

Reports Finding Waste................................................................................................. 2

State Agencies Have Spent at Least $2 Million on Travel, But That Amount 

Could Be Higher Given the Lack of Transparency in State Agency 

Reporting....................................................................................................................... 6

SIGTARP Identified Weak Internal Controls at Several State Agencies Which 

Resulted in Some Violations of Federal Regulations for Travel and 

Conference Charges..................................................................................................... 8

Some State Agencies Overcharged TARP for Luxury Hotels at High Rates 

Resulting in $17,008 in Waste and Violations of Federal Regulations................... 10

Luxury hotels at high rates to attend Treasury’s annual HHF Summit .......................... 10

The Indiana agency charged TARP $5,113, for two officials to stay four nights at 

the Terranea Resorts hotel in Los Angeles at rates that were not reasonable ........ 12

Several State Agencies Violated Federal Regulations by Charging TARP for 

Travel for State Officials to Attend Conferences, Meetings or Events with 

Other Federal Agencies or on Non-Hardest Hit Fund Topics ................................. 14

Some State Agencies Charged TARP More Than $100,000 to Attend the FourDay Annual Conference of a Trade Association and the Trade Association’s 

Weeklong Annual Training, Without Documenting Why Each Individual’s 

Participation Was Necessary for HHF, as Required by Federal Cost 

Regulations ................................................................................................................. 17

Fourteen State Agency Officials Extended the Trade Association Conference 

Trips an Extra Night, Without Documentation Justifying How the Extra 

Night Was Necessary for HHF as Required by Federal Cost Regulations............. 22

Florida officials routinely charged TARP to extend work trips around annual 

conferences in New Orleans, Nashville, Miami, which was unnecessary given 

the conference schedule ......................................................................................... 22

The Florida Agency Charged TARP $20,068 for Two Senior Officials to Travel 

to 15 and 17 Conferences, Some of Which Had No Hardest Hit Fund 

Sessions and Others had Just 1.5 Hours Related to HHF in a Four-Day 

Conference, and More Than $19,000 for Other Travel That Violated Federal 

Regulations ................................................................................................................. 23

The Florida agency charged TARP for its officials to travel to the agency’s 

monthly board meetings, an annual Florida housing conference, and other 
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SIGTARP-19-001 v March 7, 2019

conferences and travel where there was no documentation that the travel 

was necessary for HHF, violating Federal cost regulations ..................................... 27

After the Ohio Agency Decided to Close the HHF Program to Homeowner

Applications in 2014, it Significantly Deviated from Past Practices By 

Charging TARP More Than $7,000 to Hold Conferences for Housing 

Counselors at Zoos, and More Than $28,000 for Travel of 13 Officials to 

Conferences When it Previously Charged for 1-3 Officials..................................... 29

The Nevada Contractor NAHAC Alleged in Court Filings that an Official 

Charged TARP for a Personal Weekend Trip to a Las Vegas Casino, But Did 

Not Reimburse Treasury $543 for the Travel and then Charged TARP For 

$37,298 in Investigation and Litigation Costs Related to Termination of the 

Official.......................................................................................................................... 34

The North Carolina Agency Violated Treasury’s Contract and Federal 

Regulations When It Charged TARP Nearly $130,000 to Host Annual 

Housing Counselor Conferences that Included Social Activities and Other 

Broad Housing Conferences...................................................................................... 37

In 2010, before any homeowners had received a dollar from HHF, the North 

Carolina agency violated Federal regulations by charging TARP $3,130 for an 

evening reception for housing counselors, including a uniformed chef at a 

carving station, and gourmet desserts including “Strawberry Shortcake 

Martinis, Cake Bites, and Mousse Shooters of the Season”.................................... 39

The North Carolina agency violated Treasury’s contract and Federal regulations 

by charging TARP $41,626 to hold its 2013 annual conference with housing 

counselors, charging TARP for a professional speaker who spoke on 

“Motivation by Chocolate,” hotel rooms for more than 100 people, and a 

Thank You dinner for 160 people ............................................................................ 42

In 2011 and 2012, the North Carolina agency violated Federal regulations by 

inappropriately shifting to TARP $32,090 in travel for housing counselors to 

attend an annual Affordable Housing Conference that did not discuss HHF 

where counselors received continuing education credits......................................... 47

In 2011 and 2012, the North Carolina agency violated Federal regulations by 

charging TARP $15,537 for Entertainment/Social Activities Costs at the 

annual HHF conference, and $1,511 for lunch at the 2011 conference when 

the agenda said lunch was “on-their-own”............................................................... 48

After Congress authorized additional TARP dollars for HHF in 2016, the North 

Carolina agency violated Treasury’s contract and Federal regulations by 

charging TARP 100% of the costs ($13,852) to hold its 2016 annual 

conference with housing counselors........................................................................ 49

The North Carolina agency violated Federal cost regulations by charging TARP 

$2,820 for travel and other costs for housing counselors to attend broad 

housing counselor conferences to obtain continuing education credits................... 52

Other travel and conference costs questioned due to lack of the documentation 

required by Federal regulations............................................................................... 53
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The North Carolina agency charged TARP $14,777 to co-host a town’s Job 

Search Boot Camp, including paying the speaker fee and buying 120 copies 

of the speaker’s book on job searches .................................................................... 53

State Agencies Charged Disproportionate Amounts of Travel and Conference 

Costs to the Hardest Hit Fund in Violation of Federal Cost Regulations............... 55

The Alabama agency charged TARP 100% of nearly $2,000 for two officials to 

travel to and attend a 4-day conference where they gave a one hour 

presentation on HHF and two non-HHF programs. The Alabama agency 

charged TARP 100% of $1,222 for two officials to travel to and attend another 

conference where they gave a one hour presentation on HHF and two nonHHF programs......................................................................................................... 55

The Arizona agency charged TARP 100% of the costs for an official to attend two 

conferences in New York and Washington with other Federal agencies and 

attorney general offices to discuss HHF and non-HHF programs............................ 56

Other Travel Costs Not Supported by Documentation Justifying that the 

Traveler’s Participation Was Necessary for the Hardest Hit Fund, as 

Required by Federal Regulations.............................................................................. 57

Conclusion........................................................................................................................ 58

Recommendations ........................................................................................................... 64

Management Comments and SIGTARP’s Response..................................................... 68

Appendix A – Objective, Scope, and Methodology....................................................... 69

Limitations on Data ....................................................................................................... 70

Use of Computer-Processed Data ................................................................................ 70

Internal Controls............................................................................................................ 70

Prior Coverage.............................................................................................................. 70

Appendix B – Management Comments.......................................................................... 72
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Background

Federal taxpayers have paid $859.6 million for state agency operating costs to administer 

TARP’s Hardest Hit Fund (HHF), and will pay at least $206 million more through December 

2021.1 The purpose of the program is foreclosure prevention. The state agencies’ role 

under Treasury contracts is to distribute TARP dollars to homeowners (primarily those 

unemployed or underemployed), first time homebuyers, and to contractors, cities, and 

others involved in blight demolition. Of the $9.6 billion total authorized for HHF, 73% is for 

homeowner mortgage assistance ($7 billion), 8% for blight demolition ($765 million), 8% 

for homebuyer down payment assistance ($ 734 million), and 11% for state agency 

administrative expenses ($1.066 billion) as of June 30, 2018.

With more than $1 billion budgeted for state agency operating costs, it is critical that these 

taxpayer dollars are spent as Congress intended. Congress did not expressly authorize the 

Hardest Hit Fund program or any of its costs in TARP’s authorizing law the Emergency 

Economic Stabilization Act (EESA). Instead, Treasury interpreted EESA’s authorization for 

Treasury to purchase “troubled assets from any financial institution,” and to use “loan

guarantees and credit enhancements to facilitate loan modifications to prevent avoidable 

foreclosures” as authority for HHF.2 Treasury views its contracts with state agencies as 

“financial instruments,” and determined that some of the housing finance agencies qualified 

as “financial institutions,” while others had affiliated entities that qualified.3 In 2010, 

Treasury’s General Counsel wrote to Treasury Secretary Timothy Geithner that 

“government funds may be used only for their intended purpose,” referring to Congress’ 

intent.4 Treasury’s General Counsel told Secretary Geithner that Treasury gave guidelines 

to the state agencies that their proposals must “meet the requirements of EESA.” 

Any dollar wasted or spent inappropriately is one less dollar for homeowners or in 

taxpayer savings. Beginning in 2016, SIGTARP issued a series of audits that identified $11 

million that state agencies wasted or squandered on their own expenses. SIGTARP 

identified parties, picnics, other celebrations, a Mercedes Benz car allowance, employee 

gifts, employee gym memberships, legal fees and settlements for discrimination and other 

potential violations of the law, cash bonuses, employee parking, the build out of a new 

customer center where most of the customers were not for HHF, a luxury office suite, 

unnecessary cloud storage for a shuttered program, other costs unrelated to HHF, and 

more. SIGTARP initiated this audit based on a request by Senator Charles Grassley.5

 1 Although the Hardest Hit Fund was scheduled to end in December 2017, Congress determined that there 

was continued need. In the December 2015 appropriation for Fiscal Year 2016, Congress added an additional 

$2 billion and extended the program. Treasury amended its contracts to allow TARP spending through 

December 2021.

2 See Memorandum for Secretary Geithner from George Madison, September 10, 2010, made public as an 

attachment to 2010 letter to Senator Brown and 2010 letter to Representative Kilroy. 3 See Id. This report refers to the state housing finance agencies and any affiliated nonprofit “financial 

institutions” engaged under Treasury’s HHF contracts, collectively, as “state agencies.” 4 See Id.

5 This audit was conducted in accordance with generally accepted government auditing standards established 

by the U.S. Government Accountability Office. See Appendix A for the audit objectives, scope, and 

methodology.
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Treasury Lacked Effective Oversight Over State Agency 

Expenses, But Has Begun Taking Steps to Increase 

Oversight in Response to SIGTARP Reports Finding 

Waste

Treasury and state agencies treat the Hardest Hit Fund much like a grant and, therefore, 

the program should be afforded the same best practices that apply to Federal grants, 

including effective oversight and internal controls in managing them. On July 25, 2018, the 

Government Accountability Office’s (GAO) Director of Strategic Issues testified before the 

House Committee on Oversight and Government Reform:

Our prior work has shown that when awarding and managing federal grants, 

effective oversight and internal control is important to provide reasonable 

assurance to federal managers and taxpayers that grants are awarded 

properly, recipients are eligible, and federal grant funds are used as 

intended and in accordance with applicable laws and regulations. 

Internal control comprises the plans, methods, and procedures agencies use 

to be reasonably assured that their missions, goals, and objectives can be 

met. In numerous reviews, we and agency inspectors general identified 

weaknesses in agencies’ internal controls for managing and overseeing 

grants. Specifically, we found that when such controls are weak, federal 

grant-making agencies face challenges in achieving grant program goals 

and assuring the proper and effective use of federal funds to help avoid 

improper payments. 6

Treasury initially designed the Hardest Hit Fund to limit administrative expenses to ensure 

that the TARP funds were used as intended. Treasury analyzed expenses authorized by 

EESA, and entered into contracts limiting the amount and category of “Permitted 

Expenses.” Treasury applied Federal cost regulations that are standard for Federal grants 

or awards, despite the fact that HHF is not a grant. At the time, Federal cost regulations 

were contained in OMB Circular A-87, which was later incorporated in substantially similar 

form into 2 CFR § 200, Subpart E. 7 

Over the years, Treasury conducted more than 100 in-person reviews with the state 

agencies to review their programs and administrative expenses. 

SIGTARP has found that from 2011 to 2017 Treasury failed to follow up on these reviews to 

ensure that state agencies used the grant-like Hardest Hit Funds as intended and in 

 6 Emphasis added. Statement of Michelle Sager, Testimony before the U.S. House of Representatives 

Committee on Oversight and Government Reform “Grants Management Observations on Challenges and 

Opportunities for Reform” GAO-18-676T, July 25, 2018, https://www.gao.gov/assets/700/693398.pdf

(accessed 12/10/2018). This testimony references GAO’s findings in its report, “Grants to State and Local 

Governments: An Overview of Federal Funding Levels and Selected Challenges,”

http://www.gao.gov/assets/650/648792.pdf (accessed 12/11/2018). 7 Effective January 1, 2017, Treasury directed the state agencies to apply 2 CFR § 200, Subpart E to HHF 

administrative expenses.
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accordance with Treasury’s limitations and requirements, and with Federal cost 

regulations, as follows: 

1. Treasury did not hold state agencies accountable for filing quarterly financial 

reports timely. 

2. Treasury did not ensure that state agencies accurately reported travel in the 

“Travel” category in their periodic reports. 

3. Treasury reviewed only a small sample of administrative expenses. 

4. Although the purpose of the Federal cost regulations is “greater uniformity in 

the costing procedures of nonfederal governments and in the reimbursement 

practices of Federal agencies,” Treasury did not issue any guidance on 

implementing Federal cost regulations as other Federal agencies have done. 

Treasury’s lack of guidance does not excuse state agencies for violating Federal 

cost regulations, but it would have resulted in consistency and cost savings. 

SIGTARP is aware of a single instance when Treasury issued guidance, limiting 

attendees at its annual HHF Summit to two per state, which led to cost savings 

and consistency. 

5. Treasury did not enforce the Federal cost regulations’ 10 “basic guidelines” also 

called “general tests” for allowability. Federal cost regulations state, “To be 

allowable under Federal awards, costs must meet the following general criteria:

a. Be necessary and reasonable for proper and efficient performance and 

administration of Federal awards.

b. Be allocable to Federal awards under the provisions of this Circular.

c. Be authorized or not prohibited under State or local laws or regulations.

d. Conform to any limitations or exclusions set forth in these principles, Federal 

laws, terms and conditions of the Federal award, or other governing 

regulations as to types or amounts of cost items.

e. Be consistent with policies, regulations, and procedures that apply uniformly 

to both Federal awards and other activities of the governmental unit.

f. Be accorded consistent treatment. 

g. Be in accordance with generally accepted accounting principles.

h. Not be included as a cost to meet cost or used to meet cost sharing or 

matching requirements or any other Federal award.

i. Be the net of all applicable credits.

j. Be adequately documented.”

6. Treasury officials did not conduct reviews to determine whether an expense was 

“necessary,” or analyze the factors for reasonableness contained in the Federal 

cost regulations to determine “if in its nature and amount, it does not exceed that 
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which would be incurred by a prudent person under the circumstances 

prevailing at the time the decision was made to incur the cost.”8

7. Treasury officials did not consistently apply the Federal cost regulations’ general 

test to determine whether costs were “allocable” to the Hardest Hit Fund. A cost 

is allocable if the goods or services are chargeable according to the relative 

benefits receive. Treasury officials also did not consistently ensure “cost 

allocation” were appropriate (splitting costs that benefitted HHF and another 

program or service in proportion to the benefits received).9 Documentation of 

Treasury’s reviews do not show Treasury’s determinations about the relevant 

benefits received.

8. Treasury officials did not consistently and appropriately apply the Federal cost 

regulation’s other general tests of allowability, including for example, that the 

cost be adequately documented.

9. Treasury officials did not enforce the Federal cost regulation’s specific 

requirement for travel costs that “documentation must justify that: (1) 

participation of the individual is necessary to the Federal award; and (2) the 

costs are reasonable and consistent with non-federal entity’s established travel 

policy.”10 SIGTARP found many examples where, for example: (1) a state agency 

had no documentation that the travel was necessary for HHF; (2) there was a 

general statement that the travel was related to HHF, but it was not clear how it 

related to HHF (for example, a conference); and (3) multiple officials charged 

TARP to attend the same conference or event, without any documentation as to 

how the participation of each individual was necessary, as is required by the 

Federal regulations.

After SIGTARP reports finding waste, Treasury has begun taking steps to increase its 

effective management of costs and, as a result, more than $1 million has been returned to 

the Government. Treasury has not issued any guidance implementing the Federal cost 

regulations and, as detailed throughout this report, still does not consistently enforce the 

regulations’ general tests for allowability.

Treasury has not recovered $10 million identified by SIGTARP as violating the regulations’

general tests that a cost be necessary, reasonable, and allocable to HHF, even if the category 

 8 OMB Circular A-87, which goes on to provide: “The question of reasonableness is particularly important 

when governmental units or components are predominately federally funded.” According to that Circular, 

the factors for reasonableness are: (a) Whether the cost is generally recognized as ordinary and necessary 

for the performance of HHF; (b) Sound business practices; arms’-length bargaining; Federal, State and 

other laws and regulations; and, terms and conditions of HHF; (c) Market prices for comparable goods or 

services; (d) Whether the individuals concerned acted with prudence in the circumstances considering 

their responsibilities to the governmental unit, its employees, the public at large, and the Federal 

Government; and (e) Significant deviations from the established practices of the governmental unit which 

may unjustifiably increase the Federal award's cost. 9 Implementation Guide for Office of Management and Budget Circular A-87, “A Guide for State, Local and 

Indian Tribal Governments,” 2-12. 10 2 CFR § 200.474(b) (1)-(2). OMB Circular A-87, attachment B, 43b.
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of expense was mentioned in Federal regulations. The Implementation Guide for OMB 

Circular A-87 provides:

Although Attachment B of Circular A-87 lists a number of selected items of 

cost, which frequently represent significant amounts in individual federal 

awards or are costs for which there is a specific Federal policy. Attachment A 

establishes general tests of allowability that apply irrespective of whether a 

particular item of cost is specifically mentioned in Attachment B. These 

general tests frequently involve judgment and an assessment of the facts and 

circumstances in which the specific cost is incurred. The tests are not only 

listed in the Circular itself, but are frequently restated in compliance audit 

guidance that Federal and nonfederal auditors use to carry out field work 

and reporting. 

Treasury’s practice does not conform with the Circular A-87 Implementation Guide, leading

to inappropriate charges to TARP. Treasury’s practice lacks effectiveness, leads to 

inconsistent reimbursement among the Federal government, and gives an imprimatur to 

violations of Federal regulations. For example, in September 2016, SIGTARP identified 

$20,000 charged to TARP for a severance payment to the CEO of the Nevada contractor 

forced to resign after HHF Nevada all but stopped admitting homeowners to HHF—a CEO 

who charged TARP to drive a Mercedes Benz and for country club lunches and parties. 

Treasury did not recover the costs, finding that the Federal regulations allow for severance. 

However, the regulations only allow severance with normal turnover, requiring that any 

abnormal severance pay (as was the case) be approved by the Federal agency. Treasury 

did not recover the $20,000 despite it violating the Federal regulations. 

Treasury’s failure to enforce the Federal cost regulations has resulted in inconsistency and 

spending of TARP not as Congress intended.11 Members of Congress have already 

questioned the waste SIGTARP identified as contrary to Congress’ intent.12

 11 See, for example, “Frequently Asked Questions to Assist U.S. Department of Education Grantees to 

Appropriately Use Federal Funds for Conferences and Meetings,” 

https://www2.ed.gov/policy/fund/guid/uniform-guidance/faqs-grantee-conferences.doc (accessed 

2/26/2019). 12 See News release by Senator Charles Grassley, August 25, 2017 “Congress didn’t intend this program for 

bureaucrats to live high on the hog, yet the bureaucrats in question did exactly that.” See also Ten Years of 

TARP: Examining the Hardest Hit Fund: Hearing before the Subcommittees on Intergovernmental Affairs 

and Government Operations, Committee on Oversight and Government Reform, May 22, 2018, Statement of 

Chairman Palmer, (“It is the duty of federal and state partners to ensure that taxpayer dollars [from]

federally funded state administered programs are used for their intended purpose. None of the payments 

identified by SIGTARP’s report advanced the main purpose of the program, to prevent foreclosure and 

provide assistance to homeowners most affected by the housing crisis”); Statement of Chairman Meadows,

(“As we look at all of this, this is all about being accountable for the hard-working American taxpayer 

dollar, and making sure that those priorities go and are invested in those areas that best help those that are 

in need”). 
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SIGTARP-19-001 6 March 7, 2019

State Agencies Have Spent at Least $2 Million on Travel, 

But That Amount Could Be Higher Given the Lack of 

Transparency in State Agency Reporting 

SIGTARP found inconsistency in the state agencies’ reporting to Treasury on expenses, 

harming transparency and oversight. As a result, the total dollars charged to TARP for 

travel and conference costs cannot be determined with accuracy. Treasury budgeted $3.4

million for state agency travel, with $2.1 million reportedly spent as of June 30, 2018 (Table 

1). However, in actuality, both amounts are higher. SIGTARP found that state agencies did 

not report all travel to Treasury as “Travel,” but instead in some cases reported it as 

training, marketing, professional services, counseling, and servicing. Accuracy in 

determining the total dollars charged to TARP is also made difficult by the fact that state 

agencies do not report expenses as “Conferences.” Treasury has not included “Conferences” 

as a “Permitted Expense.” 

Table 1. Treasury Budget For State Agency Travel, as of June 30, 2018

* The amount of TARP dollars that remain available for each state agency to spend on travel could fluctuate as 

state agencies continually request Treasury to change their budgets. For example, although the Michigan 

agency exceeded its travel budget, Treasury did not hold Michigan to its budget, but allowed the state agency 

to increase its travel budget by shifting dollars from other administrative expense categories.

Source: Treasury reporting of state agency Quarterly Financial Reports, as of June 30, 2018.

State 

Agency/Contractor 

Location

TARP $ Reported 

to UST as Spent 

on "Travel" 

(Cumulative)

TARP $ Available 

to Spend on 

Travel per UST 

Budget*

Alabama $ 24,295 $ 75,705 24% ($ 100,000)

Arizona $ 41,703 $ 14,947 74% ($ 56,650)

California $ 754,651 $ 382,677 66% ($ 1,137,328)

Florida $ 342,813 $ 39,187 90% ($ 382,000)

District of Columbia $ 691 $ 8,309 8% ($ 9,000)

Georgia $ 62,032 $ 51,316 55% ($ 113,348)

Illinois $ 86,228 $ 24,011 78% ($ 110,239)

Indiana $ 52,522 $ 17,478 75% ($ 70,000)

Kentucky $ 31,025 $ 13,680 69% ($ 44,705)

Michigan $ 81,600 $ (11,600) 117% ($ 70,000)

Mississippi $ 41,184 $ 6,816 86% ($ 48,000)

Nevada $ 114,090 $ 137,058 45% ($ 251,148)

New Jersey $ 15,904 $ 9,096 64% ($ 25,000)

North Carolina $ 158,722 $ 130,890 55% ($ 289,612)

Ohio $ 71,519 $ 63,238 53% ($ 134,757)

Oregon $ 89,490 $ 109,158 45% ($ 198,648)

Rhode Island $ 1,639 $ 23,361 7% ($ 25,000)

South Carolina $ 49,748 $ 123,460 29% ($ 173,208)

Tennessee $ 50,470 $ 83,717 38% ($ 134,187)

Grand Total $ 2,070,327 $ 1,302,503 61% ($ 3,372,830)

Percentage of UST 

Budget Spent on 

Travel (UST 

"Travel" Budget*)
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SIGTARP-19-001 7 March 7, 2019

Treasury established low travel budgets in comparison to the total administrative 

expenses for each state. For example, Treasury only budgeted for the 11 years of the 

program $9,000 for travel for the Washington, D.C. agency, and $25,000 for state agencies 

in New Jersey and Rhode Island. The Rhode Island state agency reported to Treasury 

spending only $1,639 TARP dollars on travel since 2010. However, it charged more than 

that for travel, but lumped it under the “Marketing/PR” and the “Misc. Note Servicing” 

category of expenses. Lumping travel into non-travel categories obscures the true amount 

of travel from the public and oversight. 
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SIGTARP-19-001 8 March 7, 2019

SIGTARP Identified Weak Internal Controls at Several 

State Agencies Which Resulted in Some Violations of 

Federal Regulations for Travel and Conference Charges

SIGTARP found many instances where state agencies followed the Federal cost regulations’

requirements for travel and to attend conferences, as well as many instances of violations 

of Federal regulations for travel to attend conferences, meetings or other events. SIGTARP 

also identified weak internal controls at state agencies that likely contributed to the 

inappropriate charges to TARP (Table 2). 

Table 2. Examples of Internal Control Weaknesses Identified by SIGTARP

Internal Control Weakness Leading to Overcharging TARP 

for Travel and Conference Costs State agency

No documentation of travel costs showing individual’s participation 

was necessary for HHF as required by Federal regulations AZ, FL, IN, NC, GA

Lacking explanation of purpose of the expenditure necessary for 

HHF

FL, NC, GA, TN, AZ, KY, 

NV, SC, IL

Missing conference agendas or other documentation on purpose of 

trip and topics discussed FL, IN, NC

Multiple travelers charged for same conference or meeting with no 

justification regarding the participation of each individual FL, NC, OH

Travel did not comply with state travel policy on hotel rates AZ, GA, IN, KY, NV, OH

Not adequately documented: Missing receipts or other 

documentation, illegible receipts NV, GA, NC, TN, IN, IL

Travelers stayed longer than allowed by Federal cost regulations

without documentation justifying how it was necessary for TARP 

versus non-HHF matters

AZ, GA, FL, IL, MS, NC, 

OH, SC

Misclassification of expenses RI

Travel did not comply with Federal/state requirements on airline 

travel NV, CA

Traveler failed to attend meeting (no show) that has been paid for 

using HHF dollars NV

Improper cost allocation: Travel costs allocated based on the 

percentage of time the employee worked on HHF rather than the 

benefit to HHF as required by Federal regulations

FL

Improper cost allocation: Disproportionate cost allocated to TARP AL, AZ

Source: SIGTARP review of agency provided data.
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SIGTARP-19-001 9 March 7, 2019

In many instances, these weak internal controls resulted in the state agency overcharging 

TARP for travel and conference costs in violation of Federal cost regulations and Treasury’s 

contract. For example:

• The Nevada contractor, the Nevada Affordable Housing Assistance Corporation 

(NAHAC), did not have effective internal controls to ensure compliance with its 

travel policy that upgrades are not allowable travel expenses, and with the Federal 

cost regulations’ requirement that they use the least expensive airfare in the 

absence of a specific exception.13 SIGTARP found that NAHAC charged TARP $560

for the prior CEO to upgrade to business class on three trips, $402 roundtrip for 

another official to fly to Reno business class when others on the same trip flew 

economy for $152 a roundtrip ticket, and two officials to fly business class to fly 

roundtrip between Reno and Las Vegas for $426 and $446 each. NAHAC also 

charged TARP $315 for two “no show” non-refundable hotel reservations, and $436 

for unused airfare.

• The Florida agency did not appropriately allocate costs between TARP and other 

sources of funding based on the benefit to HHF, as required by Federal cost 

regulations. For example, the Florida Auditor General, in a November 2012 audit 

found:

[W]e reviewed the Corporation’s allocation of administrative costs and 

noted that the methodology in some instances did not ensure 

compliance with OMB Circular A-87. Specifically: During the period 

January 2011 through June 2012, the Corporation included 

unallowable costs totaling $2,516 in its cost allocation... for items such 

as gift cards, flowers, and food and decorations for employee parties. 

OMB Circular A-87 specifically prohibits the use of Federal funds for 

costs related to entertainment and items for the personal use of 

employees. ¬ The Corporation included excess travel costs in the 

allocation. As noted in finding No. 14, contrary to State law, the 

Corporation’s travel policy permitted travel cost reimbursement rates 

in excess of the rates authorized by State law.... As a result of these cost 

allocation methodology issues, some costs allocated to Federal awards 

programs may not be allowable. 

 13 Exceptions include travel that requires circuitous routing or travel during unreasonable hours, excessively 

prolonged travel, or is not reasonably adequate for traveler’s medical needs. 2 CFR § 200.474(d). OMB 

Circular A-87, attachment B, 43c (1).
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Some State Agencies Overcharged TARP for Luxury 

Hotels at High Rates Resulting in $17,008 in Waste and 

Violations of Federal Regulations

Luxury hotels at high rates to attend Treasury’s annual HHF Summit

SIGTARP identified violations of Federal regulations for travel to Treasury’s annual Hardest 

Hit Fund Summit by some state agencies that charged TARP for officials to stay in luxury 

hotels at high rates.14 Data analytics showed that hotel costs to attend Treasury’s HHF 

Summits almost quadrupled from $10,300 in 2013 to almost $40,000 in 2014. 

SIGTARP identified that the quadrupling of hotel costs from 2013 to 2014 was caused by 

some state agencies overcharging TARP for luxury hotels at high rates, and by some 

agencies increasing the number of officials traveling. In 2013, Treasury took steps to 

mitigate violations of Federal cost regulations by negotiating a GSA hotel rate, but Treasury 

did not do that in 2014, instead sending state agencies a hotel list that included luxury 

hotels. Some state officials chose hotels on the list with the GSA rate of $224, while others 

took advantage, choosing high-rate luxury hotels.15 While the Federal cost regulations do 

not require state agencies to use the GSA rate, costs cannot exceed charges normally 

allowed by the state agency and/or that were not reasonable and consistent with the 

agency’s travel policy.16 For example: 

(1) The Kentucky agency charged TARP for two officials to stay at the Sofitel hotel at 

the rate of $510 the first night and $450 the second night, violating the Kentucky 

agency’s travel policy requiring the GSA rate, which was $224. One of the official’s 

expense reports stated, “Treasury did not obtain a group rate at a single hotel like 

it usually does. States were on our own to secure accommodations –with a lack of 

availability. This was one of the only hotels available in the vacinity [sic] of our 

meetings and certainly one of the least expensive of those with availability.” 

However, other state agencies found hotels at the GSA rate; 

(2) The Indiana agency charged TARP for one official to stay at the W Hotel for $540 

per night, one at the Mayflower at $499 per night and two at the Sofitel for $476 

per night, violating the Indiana agency’s policy on travel that requires “the lowest 

reasonable business travel expenses possible.” The Indiana agency told SIGTARP, 

“Hardest Hit Fund dollars have been utilized to pay for hotel accommodations that 

exceeded the Federal per diem limits prescribed by the U.S. General Services 

Administration. Instances in which this has occurred have primarily been the 

 14 SIGTARP determined a hotel to be luxury if it was listed as a 4-Diamond or 5-Diamond Hotel in the AAA 

Diamond Rating listings, or listed as a luxury hotel based on brand categories established by Marriott, 

Hyatt, and other brand hotels.

15 Some state agencies charged at or near the GSA rate of $224. The North Carolina agency charged around 

$200 per night at the State Plaza Hotel, the Tennessee agency charged $224 a night at the Hamilton Crown 

Plaza, and the South Carolina agency charged $80 for the Residence Inn Marriott and then $224 a night at 

Four Points by Sheraton and Courtyard Marriott. 16 2 CFR § 200.474(b). OMB Circular A-87, attachment B, 43b. 
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SIGTARP-19-001 11 March 7, 2019

result of Treasury’s identifying the hotel at which Treasury HHF Summit 

participants may stay....” Treasury’s list did not excuse violations of Federal cost 

regulations;

(3) The Ohio agency charged TARP $423 and $315 per night for two senior officials to 

stay at the W Hotel, violating the agency’s policy to use the U.S. per diem rate 

($224), while on the same trip a junior Ohio official stayed at the Hotel Harrington 

for $170 per night. The 2014 Summit took place after the Ohio agency announced 

that it was closing the Hardest Hit Fund program to applications;17

(4) The Arizona agency charged TARP for three officials to stay at the W Hotel for 

$428, $388, and $315 per night, for three nights. This violated the Arizona agency’s 

policy that requires “the least expensive single room rate published in the 

conference brochure for the conference designated lodging.” The W was not the 

least expensive hotel on Treasury’s list.

18

These charges violate Federal cost regulations. They exceed the normal hotel cost under 

state policies. They do not pass the test for reasonableness under the Federal cost 

regulations: (1) They are not ordinary and necessary for the proper and efficient 

performance of HHF; (2) there were lower market prices for comparable services; and (3) 

the individuals did not act “with prudence in the circumstances considering their 

responsibilities to the governmental unit, its employees, the public at large, and the Federal 

Government.”19 SIGTARP questions $10,346, including these examples and all hotel costs 

over per diem for the 2014 Summit in violation of each state agency’s written travel policy.

Additionally, in 2014, certain state agencies increased the number of officials traveling to 

Treasury’s Summit, sending three or four officials per state agency, which unjustifiably 

increased the cost to TARP.20 SIGTARP found that these agencies did not comply with 

Federal cost regulations as there was no documentation that justified that the participation 

of each individual was necessary to the Federal award.21 Additionally, each of these

agencies significantly deviated from their established practice of the number of officials’ 

 17 See Cleveland.com, “Save the Dream Ohio to stop receiving applications,” February 21, 2014, 

https://www.cleveland.com/open/index.ssf/2014/02/save_the_dream_ohio_to_stop_re.html, accessed 

2/8/2019; Cincinnati Enquirer, “Save the Dream Ohio Winding Down,” April 14, 2014, 

https://www.cincinnati.com/story/money/2014/04/14/save-dream-ohio-ending/7711897, accessed 

2/8/2019.

18 Arizona agency officials told SIGTARP that they chose a hotel that was walkable to avoid local 

transportation expense. This violated another Arizona agency policy, “sometimes there is a range of costs 

for similar appropriate facilities within a fairly close proximity of each other. When booking lodging, one 

should look for the most economical comparable combination of lodging and local transportation 

(including, when reasonable, walking).” Washington, D.C. has a metro system and cabs that would have 

provided the most economical combination. 19 2 CFR § 200.404. OMB Circular A-87, attachment A, C.2. 20 In 2014, state agencies in Georgia and Indiana charged TARP for four officials to travel to the Summit and 

increased the number from the prior year. In 2014, state agencies in Arizona, Florida, Mississippi, and Ohio 

charged TARP to send three officials to the Summit, an increase from the prior year. These increases 

unjustifiably increased the cost to TARP. 21 2 CFR § 200.474(b) (1)-(2). OMB Circular A-87, attachment B, 43b.
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SIGTARP-19-001 12 March 7, 2019

travel charged to TARP, which unjustifiably increased the cost, violating the 

reasonableness requirement of the Federal cost regulations.

22 

SIGTARP also finds that these charges for luxury hotels and the increase in number of 

officials traveling charged to TARP constitute waste. GAO defines waste as “the act of using 

or expending resources carelessly, extravagantly, or to no purpose,” in its Standards for 

Internal Control in the Federal Government (the Green Book). GAO has also described waste 

as: “...taxpayers do not receive reasonable value for money in connection with any 

government-funded activity due to inappropriate acts or omissions by officials with control 

over or access to government resources.” Taxpayers received no additional value for 

officials staying in a hotel with extravagant rates when GSA-rate hotels were available.

SIGTARP questions hotel costs over per diem that violated Federal cost regulations for the 

2016 and 2017 Summits. Despite the fact that Treasury’s 2015 limitation of two 

participants per state mitigated costs, in 2016, the hotel costs for the state agencies to 

attend the Summit nearly tripled to $22,695 from nearly $8,700 in 2015, and nearly 

doubled to almost $16,000 in 2017. Unlike 2013, Treasury did not prearrange a hotel at the 

GSA rate, which could have been available, instead arranging a higher rate.23 

Some states used Treasury’s actions as justification to exceed their normal travel costs 

under state travel policies, which violated Federal cost regulations. Other state agencies 

complied with Federal cost regulations. For example, New Jersey officials stayed at another 

hotel at the GSA rate. Mississippi officials stayed at the JW Marriott, but only charged TARP 

the GSA rate, paying the excess from state funding. For some state agencies, Treasury’s 

choice may have allowed them to stay within their state policy. SIGTARP questions $6,662

(all state agency travel that violated the state policy, and thereby the Federal cost 

regulations).24

The Indiana agency charged TARP $5,113, for two officials to stay four nights at 

the Terranea Resorts hotel in Los Angeles at rates that were not reasonable

In August 2014, the Indiana state agency charged TARP $5,113 for two officials’ travel to 

stay four nights at a luxury hotel the Terranea Resort in Los Angeles while training a 

contractor to conduct underwriting for the Hardest Hit Fund. The travel charges violated 

Federal cost regulations that provide that lodging costs, other subsistence and incidental 

expenses must be considered reasonable and otherwise allowable only to the extent such 

costs do not exceed charges normally allowed by the non-Federal entity in its regular 

operation as the result of the non-Federal entity’s written travel policy, and 

“documentation must justify that: (1) Participation of the individual is necessary to the 

Federal award; and (2) The costs are reasonable and consistent with non-Federal entity’s 

 22 2 CFR § 200.404(e). OMB Circular A-87, attachment A, C.2.e. 23 Treasury prearranged a rate of $309 per night at the JW Marriott in 2016, which was $83 more than the 

$226 GSA rate. In 2017, Treasury prearranged a rate of $302 per night at the Westin City Center, which 

was $60 more than the $242 GSA rate. 24 The total hotel costs that violated the state travel policies was $354 (2011), $1,309 (2012), $88 (2013), 

$3,237 (2016), and $1,674 (2017).
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established travel policy.” This travel violated the Indiana agency’s policy on travel that 

requires “the lowest reasonable business travel expenses possible.” 

TAXPAYER DOLLARS RECOVERED and COST SAVINGS:

After SIGTARP asked for documentation, the Indiana state 

agency determined that there were five far less expensive 

hotels available and repaid Treasury $5,113. This 

represents immediate cost recoveries from SIGTARP’s 

oversight and this audit.
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SIGTARP-19-001 14 March 7, 2019

Several State Agencies Violated Federal Regulations by 

Charging TARP for Travel for State Officials to Attend 

Conferences, Meetings or Events with Other Federal 

Agencies or on Non-Hardest Hit Fund Topics 

SIGTARP did not question “travel expenses incurred specifically to carry out the award,” 

meaning the Hardest Hit Fund, as allowed by Federal regulations, but found travel costs 

that fell far short of that standard. In order to determine that travel expenses were incurred 

specifically to carry out the award, SIGTARP reviewed the Federal cost regulations’ specific 

requirement for travel costs that “documentation must justify that: (1) participation of the 

individual is necessary to the Federal award; and (2) the costs are reasonable and 

consistent with non-federal entity’s established travel policy.”25 

Federal cost regulations define reasonableness “if, in its nature and amount, it does not 

exceed that which would be incurred by a prudent person under the circumstances 

prevailing at the time the decision was made to incur the cost.” The Federal cost 

regulations provide five factors for determining reasonableness:

(1) Whether the cost is generally recognized as ordinary and necessary for the 

operation of the non-Federal entity or the proper and efficient performance of the 

Federal award;

(2) The restraints or requirements imposed by such factors as sound business 

practices; arms-length bargaining; Federal, state and other laws and regulations, 

and, terms and conditions of the Federal award;

(3) Market prices for comparable goods or services for the geographic area;

(4) Whether the individuals concerned acted with prudence in the circumstances

considering their responsibilities to the non-Federal entity, its employees, where 

applicable its students or membership, the public at large, and the federal 

government; and 

(5) Whether the non-Federal entity significantly deviates from its established practices

and policies regarding the incurrence of costs, which may unjustifiably increase the 

Federal award’s cost.

SIGTARP questions the cost of the following travel for officials to attend conferences, 

meetings or other events that were not on Hardest Hit Fund topics. In each of these 

examples, there was no documentation required by the Federal regulations that the 

individual’s participation was necessary for HHF: 

• The Georgia agency charged TARP $4,877 for its Deputy Executive Director to travel 10 

times for non-HHF related travel, as well as for the non-HHF related travel of two other

officials. This included charging TARP for a 14A Bond Pricing conference in New York 

staying at the Tribeca Grand Hotel ($1,281), a “Melville Meeting “on tenant selection 

policies in Washington, D.C. ($866), a panel on the low income housing tax credit in 

 25 2 CFR § 200.474(b) (1)-(2). OMB Circular A-87, attachment B, 43b.
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SIGTARP-19-001 15 March 7, 2019

Florida ($685), and an American Bar Association Affordable Housing event in 

Washington, D.C. ($94).26 In 2017, SIGTARP reported that the Georgia agency 

mismanaged the Hardest Hit Fund, withholding funds from homeowners despite 

repeated warnings of overly strict criteria, unnecessary red tape, and a difficult and 

burdensome homeowner application process.27 

• The Indiana agency charged TARP $2,230 for officials to travel to a HUD Meeting in 

Chicago and to a Federal Reserve conference on general foreclosure issues in New York 

in 2012, and $153 to travel to a job fair in 2014. 

• The California contractor administering HHF charged TARP $3,573 to attend the same 

Federal Reserve conference in New York in 2012 that the Indiana agency charged, 

which included a dinner with staff from the New York Federal Reserve Bank and 

Citibank. The agenda does not discuss HHF. The California contractor also charged 

TARP $2,882 for three officials to attend the three-day California Mortgage Banker 

Association conference in Las Vegas. There was no agenda attached. Officials described 

the purpose of the trip in the request form as, “To meet with other Loan Servicers to 

discuss and share information about compliance, regulations, new federal bankruptcy 

rules, REOs, and servicing technology in this uncertain market.” The contractor also 

charged $2,763 for officials to travel to the CoreLogic Risk Summit conference in 2016 

at the St. Regis Monarch Beach Resort. The agenda did not discuss HHF. The contractor 

charged $1,939 for two officials to travel to the CA Credit Union League Conference in 

Las Vegas. 

• In July 2016, after Congress approved new Hardest Hit Funds, the Tennessee agency 

charged TARP $184 for officials to travel and attend a baseball game with land banks 

where they gave out gifts to promote the blight program. Travel to a baseball game 

violates Federal cost regulation 2 CFR § 200.438: “Costs of entertainment, including 

amusement, diversion, and social activities, any associated costs are unallowable....”28

Other travel charged to TARP of $2,666 included a Leadership Academy in 2016, the 

Chattanooga Summit in 2016, and an “Executive Management function” in 2017, a 

ribbon cutting ceremony in 2011, a Southeastern Directors conference in Nashville in 

2014, and meetings with Veterans Affairs and Goodyear employees in 2011. The agency 

had no agendas or other documentation justifying that individual’s participation was 

necessary for HHF. The agency did include an agenda supporting a $201 charge for an 

official to travel to a Federation of Appalachian Housing Enterprises conference in 

2017, but the agenda did not discuss HHF. The agency also charged TARP $399 for 

“Workplace Environment” training. Although training is allowed under the Federal cost 

 26 The charges also violated Federal cost regulations because they violated the Georgia agency’s travel policy 

on required documentation that was missing. This state policy provides, “The overall, specific business 

purpose of the trip clearly be stated on expense submission.” “Business purpose should include people 

involved, business topics covered, brief explanation of duties performed.” “Receipts must contain 

appropriate detail, including starting and ending destinations, hotel charges, and detailed item charges.” “A 

specific business purpose for the expenditure must be noted on every expense submitted.” 27 SIGTARP, Mismanagement of the Hardest Hit Fund in Georgia, October 3, 2017. 28 There are certain limited exceptions, not applicable here.
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SIGTARP-19-001 16 March 7, 2019

regulations, it still must pass the general tests for allowability and, in this case, the 

agency had no documentation that the training was necessary for HHF.

• In 2013, the Kentucky agency charged TARP $1,749 for travel ($299) and a booth 

($1,450) at the Kentucky Society for Human Resources Management annual conference 

for the Kentucky Homeownership Protection Center, which serves other state 

programs, and $1,063 for travel ($563) and a booth ($500) at the Kentucky Sheriff’s 

conference, without documentation to support the charges. 

• The Arizona agency charged TARP $287 for an official in 2014 to travel to the Home 

Preservation Exchange conference in Washington, D.C., where the primary topic was an 

FHA program, $874 for an official in 2011 to attend the Annual Mortgage Servicing 

conference in Dallas, $96 for an official to attend the 2010 Governor’s Housing Forum, 

$286 for an official in 2014 to attend the Arizona agency’s housing forum, and $86 for 

travel to a job fair in 2012. The documentation for these trips showed no discussion of 

HHF. 

• The Alabama agency charged TARP $4,681 from 2014 to 2017 for travel for two 

officials and a booth at Mortgage Bankers Association of Alabama. The conference 

agendas do not discuss HHF. 

• The South Carolina agency charged TARP $5,392 for an official to travel “To attend the 

September 2013 Board of Commissioners Meeting & Annual Retreat in Charleston, S.C.,” 

for officials to travel to the Emphasys Software Conference in 2015 and 2016, for 

officials to travel to the Mortgage Bankers Association of the Carolinas Conference on 

Hilton Head Island in 2013 and 2015, for officials to attend the Government Finance 

Officers Association conference, and for two officials to attend state supervisory 

practice training. 

• The Illinois agency charged TARP $1,675 for an official to attend the Annual Hispanic 

Employees Training Conference in 2014, the Municipal League Conference in 2016, and 

the Housing Action Conference in 2012. The agendas to these conferences do not 

discuss HHF.
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SIGTARP-19-001 17 March 7, 2019

Some State Agencies Charged TARP More Than 

$100,000 to Attend the Four-Day Annual Conference of a 

Trade Association and the Trade Association’s Weeklong 

Annual Training, Without Documenting Why Each 

Individual’s Participation Was Necessary for HHF, as 

Required by Federal Cost Regulations

Several Agencies Did Not Charge TARP—A Michigan Official Explained that the 

Conferences Were Geared to Housing Finance Agency Business, With 99% of 

the Sessions Non-HHF

The National Council of State Housing Agencies (NCSHA) is a trade association that like 

other trade associations, hosts an annual conference at premier U.S. destinations. The fourday calendar included general business topics, general housing topics, networking events, 

motivational speakers, and social events like dinners, happy hours, and receptions. On the 

first day of each conference, NCSHA scheduled a 1.5-hour meeting on HHF, which a 

Treasury official described as “roundtable discussions rather than formal presentations,” 

that Treasury officials attended. A Treasury official told SIGTARP that Treasury did not 

sponsor the NCSHA conference and did not advertise for it. 

Treasury may have been trying to save costs. According to a Treasury official, NCSHA 

conferences “allowed Treasury to leverage existing meetings and increase the frequency 

with which we engage face-to-face with our HFA partners in HHF.” It did save costs, as 

many state agencies did not charge TARP for travel that the agency had already planned. As 

shown in Table 3 below, seven state agencies (Alabama, California, Kentucky, Michigan, 

Nevada, New Jersey, and Washington, D.C.) did not charge TARP for the annual conference. 

Three state agencies (Indiana, Mississippi, and Oregon) charged TARP for one official in a 

single trip.
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SIGTARP-19-001 18 March 7, 2019

Table 3. State Agency Charges to TARP for NCSHA Annual Conferences

State Agency Charged to TARP

Alabama $0 

California $0 

Kentucky $0 

Michigan $0 

Nevada $0 

New Jersey $0 

Washington, D.C. $0 

Rhode Island *$16

Mississippi $854 

Oregon $885 

Georgia $1,272 

Indiana **$1,325

Arizona $3,299 

North Carolina $3,615

Tennessee $5,128 

South Carolina $7,270 

Illinois 10,685

Ohio $13,615 

Florida $17,895 

Total $65,859 

*Rhode Island only charged TARP $15.50 for the train fare for one official to attend the 2010 

NCSHA annual conference. 

**SIGTARP does not question the $1,325 that Indiana charged to TARP as this did not violate 

the Federal cost regulations. 

Source: Documentation provided by state agencies.

Treasury did not issue guidance to the state agencies on whether they could charge TARP 

for travel to the conference for the $500 per person conference fee. When asked by 

SIGTARP, Treasury officials would not tell SIGTARP whether it intended for state agencies 

to charge TARP for these conferences, instead telling SIGTARP, “Treasury expects that all 

reimbursable costs incurred by the [Housing Finance Agencies] HFAs will adhere to the 

Federal cost principles in support of the HHF program.” The Treasury official explained to 

SIGTARP, “Treasury does not approve the attendance of HFA or eligible entity staff at 

conferences, or any costs associated with attendance at such conferences. The HFA is 

responsible for determining whether the use of HHF funds is allowable and allocable under 

federal cost principles.”

SIGTARP understands Treasury’s desire to meet face-to-face with state agencies. However, 

the travel and related costs cannot be unlimited and must pass the Federal cost regulations. 

In addition to the 10 general tests for allowability of a cost, the Federal cost regulations 

have an additional specific requirement for travel costs. For a travel cost to be allowable, 

“documentation must justify that: (1) participation of the individual is necessary to the 
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SIGTARP-19-001 19 March 7, 2019

Federal award; and (2) the costs are reasonable and consistent with non-federal entity’s 

established travel policy.”

It would be difficult for any state agency charging a four-day conference to TARP to meet 

these requirements of the Federal cost regulations. A Michigan agency official explained its 

decision not to charge the Hardest Hit Fund even though they attend, telling SIGTARP, 

“Ninety-nine percent of the sessions are non-HHF and geared more toward HFA business.” 

The conference agendas confirm this fact. A Kentucky agency official told SIGTARP, 

“Treasury did have a session at each conference but I did not charge any of my time to HHF. 

It was all charged to our operational budget and paid internally from KHC funds.” The 

California contractor administering HHF told SIGTARP, “CalHFA used CalHFA funds to pay 

for expenses related to CalHFA staff attendance of NCSHA events...no CAlHHF funds were 

used to pay for any expenses related to attendance of NCSHA events.” The Nevada agency 

told SIGTARP, “Various NHD staff have attended NCSHA sponsored events...however all 

expenses were paid by NHD.”

Several state agencies charged TARP all or some of the travel and conference costs for one 

or more officials to attend the full four-day annual conference, without complying with the 

Federal cost regulations’ requirements for documentation that justifies that participation of 

the individual is necessary to the Federal award and reasonable and consistent with state 

policy. SIGTARP only found one instance that the state agency had documentation required 

by Federal cost regulations and for which the costs were reasonable and consistent. The 

Indiana state agency sent its Director of Asset Preservation to travel just for the Treasury 

meeting. The documentation for the Treasury meeting was Treasury’s agenda and 

discussion topics of the Treasury meeting, not just the NCSHA larger conference agenda 

that included one line about an HHF meeting. These costs were also reasonable and 

consistent with the state agency’s travel policy. The Director flew the morning of the 

conference session with Treasury, stayed in a less expensive hotel than the conference 

hotel that night to comply with the state travel policy, and flew back the next day. 

Therefore, SIGTARP does not questions this cost.

The eleven state agencies did not comply with the Federal cost regulations’ documentation

requirements. For example, the Florida agency charged TARP the most— more than 

$17,000—for all or a portion of costs for officials to travel and attend the four-day 

conference each year.29 The Florida agency charged TARP for all or a portion of costs for 

two officials to attend the four-day 2011 conference in San Diego, four officials to travel 

and attend the four-day conference in 2012 in Orlando, three officials in 2013 in New 

Orleans, one official in 2014 in Boston, two officials in 2015 in Nashville, and two officials 

in 2016 in Miami. The only substantive documentation provided in most cases was the 

larger NCSHA conference agenda, which only showed one line of 1.5 hours out of four days 

stating HHF, without any further discussion of topics or as to why the participation of each 

of the multiple officials was necessary to HHF. SIGTARP questions these costs as violating 

Federal cost regulations.

 29 For one of these trips, one traveler charged TARP for in-room movie fees totaling $24 and noted this as a 

deduction on the reimbursement claim. The Florida agency deducted the fees from the traveler’s per diem. 
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SIGTARP-19-001 20 March 7, 2019

The Ohio agency also violated Federal cost regulations by charging TARP the second 

highest amount of any state agency—more than $13,000—without having documentation 

to justify that participation of the individual is necessary to the Federal award, as required 

by the regulations. There was no substantive documentation provided for one official to 

attend the four-day conference in 2013 in New Orleans, or for one official to attend the 

four-day conference in 2017. The only substantive documentation for one official to travel 

for six nights to attend the full conference in 2011 in San Diego, and for two officials to 

attend the four-day conference in 2012 in Orlando, was a one-page conference schedule 

and, for one other official the larger conference agenda that contained no information on 

the substance of the conference. The only documentation for one official to attend the 2015 

conference was a three-page agenda with no information on HHF. SIGTARP questions these 

costs as violating Federal cost regulations.

Treasury compliance officials who regularly reviewed charges to TARP should have been 

able to see significant inconsistencies in what the state agencies did, or did not, charge to 

TARP from these conferences, but still did not provide guidance that could have saved 

taxpayer dollars. SIGTARP found similar charges for NCSHA’s weeklong training institute in 

Washington, D.C. Even though Treasury issued guidance in 2015 limiting TARP charges for 

the HHF Summits to two officials from each state, it did not similarly limit the number of 

officials that could charge TARP for the trade association conferences. Treasury compliance 

officials did not enforce the Federal cost regulations in reviewing these charges. 

During 2017, agency officials in Florida, Ohio, and Tennessee charged TARP $1,903 to 

attend the NCSHA Annual Conference that included a 1.5 hour Treasury session. The 

documentation did not justify that participation of each individual was necessary to HHF. 

State agencies charged multiple days and only provided the larger conference agenda. Also 

during 2017, agency officials in Florida, Georgia, Ohio, South Carolina, and Tennessee 

charged TARP $5,184 to attend sessions during the NCSHA weeklong training institute and 

other NCSHA events, such as an Executive Development training, and all of these had a 

Treasury session or HHF meeting except the Executive Development training.

Treasury told SIGTARP that it did not hold a session at the 2018 NCSHA annual conference, 

but state agency officials in Florida and Tennessee charged TARP $3,340 to attend the 2018 

Annual Conference. There was no documentation to justify that participation of each 

individual who attended the 2018 annual conference was necessary to HHF. Also during 

2018, Florida, Georgia, and Tennessee state agency officials charged TARP $2,557 to attend 

sessions during the weeklong training institute, which included a Treasury session or HHF

meeting. 

SIGTARP questions $113,355 in travel costs and conference registration fees associated 

with the NCSHA annual conference ($64,533) and NCSHA annual training institute or other 

NCSHA events ($48,822) as violating the Federal cost regulations’ requirement for travel 

costs.30

 30 In March or April of each year, NCSHA held a Legislative Conference in Washington, D.C. that did not involve TARP. 

Two state agencies charged TARP $3,653 for the cost to travel and attend, which violated Federal cost regulations by 

failing to document how the individual’s participation was necessary for HHF.
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SIGTARP-19-001 21 March 7, 2019

TAXPAYER DOLLARS RECOVERED and COST SAVINGS: After 

SIGTARP’s August 2017 Hardest Hit Fund audit finding waste by state 

agencies for administrative expenses, the state agencies significantly 

decreased charges to TARP for these annual conferences, saving 

taxpayer dollars and deterring future waste. The Tennessee agency 

still charged TARP 44% of expenses for the four-day 2016 conference 

staying at the Fontainebleau Miami Beach at a charge to TARP of 

$637.24, and for the October 2017 NCSHA annual conference in 

Denver, the Ohio agency charged one official’s travel charges over 

days. The Florida agency charged $997 for the September 2016 

conference ($1,169 in savings from the prior year).
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SIGTARP-19-001 22 March 7, 2019

Fourteen State Agency Officials Extended the Trade 

Association Conference Trips an Extra Night, Without 

Documentation Justifying How the Extra Night Was 

Necessary for HHF as Required by Federal Cost 

Regulations

SIGTARP also found that fourteen state agency officials charged TARP for personal travel 

when they extended the trip an extra day before or after the trade association NCSHA 

conferences without required documentation, which must “justify that: (1) participation of 

the individual is necessary to the federal award; and (2) the costs are reasonable and 

consistent with non-federal entity’s established travel policy.” This included: three Arizona 

officials extending conferences in Boston, Nashville, and Washington, D.C.; three Florida 

officials who extended a total of 19 trips; two officials in each of Ohio and South Carolina 

extending their conference trips; and one official in each of Georgia, Illinois, Mississippi, 

and North Carolina.. In each instance, there was no documentation justifying how the 

individual’s participation in an extra travel day was necessary for HHF. 

Florida officials routinely charged TARP to extend work trips around annual 

conferences in New Orleans, Nashville, Miami, which was unnecessary given the 

conference schedule

On multiple occasions, three Florida officials extended trips to arrive one day prior or after 

the trade association NCSHA annual conferences or training, charging it to TARP. This 

included trips to New Orleans, Nashville, Orlando, Miami, and Washington, D.C. For 

example, the three officials rented a car and drove to New Orleans on October 18, 2013. 

The conference had not started yet. The Treasury HHF session of the conference was the 

next day October 19, 2013 at 3 pm. The officials could have flown from Florida to New 

Orleans the morning of October 19, as was the case with other state officials who attended 

the same conference. The officials each charged TARP an extra night in the conference hotel 

the Marriott, New Orleans, and an extra day of per diem. There was no documentation to 

show how the participation of each of these individuals for this extra day was necessary for 

TARP, as required by Federal cost regulations. Two Florida officials also charged TARP to 

extend the trip to arrive one day prior to the 2015 annual conference in Nashville, when 

the conference had not started yet, and the Treasury session on the Hardest Hit Fund was 

not until 3 pm the following day. There was no documentation to justify why it was 

necessary to incur additional costs for the Florida officials to fly from Florida to Nashville 

the day before the conference started. However, they flew into Nashville a day early on 

Friday, charging TARP an extra night in the hotel the Omni Nashville and an extra day of 

per diem. There was no documentation to show how the participation of each of these 

individuals for this extra day was necessary for TARP, as required by Federal cost 

regulations. 31

 31 Costs associated with the extra day are included in another finding in this report. 
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SIGTARP-19-001 23 March 7, 2019

The Florida Agency Charged TARP $20,068 for Two 

Senior Officials to Travel to 15 and 17 Conferences, Some 

of Which Had No Hardest Hit Fund Sessions and Others 

had Just 1.5 Hours Related to HHF in a Four-Day 

Conference, and More Than $19,000 for Other Travel That 

Violated Federal Regulations

In October 2015, SIGTARP issued an audit identifying the Florida agency as one of the most 

underperforming state agencies in the Hardest Hit Fund. The Florida agency had only 

provided HHF assistance to 20% of those who applied, the lowest of any state agency. 

SIGTARP’s 2017 audit identified that right after SIGTARP’s report, in December 2015, the 

Florida agency doubled and tripled executive cash bonuses.

In December 2016, the Florida Governor requested the resignation of the head of the 

Florida agency after the agency reportedly spent $52,000 with state dollars on a lender 

appreciation dinner of filet mignon and lobster, and hundreds of thousands of dollars on 

employee bonuses.32 At that time, Florida homeowners were waiting for help from the 

Hardest Hit Fund program. 

SIGTARP identified in the 2017 audit and in this audit that the Florida agency had a culture 

of inappropriate spending of TARP dollars. The Florida agency regularly charged TARP for 

its senior officials to travel to conferences, often treating Federal taxpayer dollars as a deep 

pocket. The Florida agency continued charging these conferences to TARP despite being 

warned in a 2012 State of Florida Auditor General report that the Florida agency’s 

allocation of administrative costs to each of its Federal award programs, including the HHF 

program, did not ensure compliance with OMB Circular A-87, “...some costs allocated to 

Federal award programs may not be allowable,” specifically referencing excess travel 

costs.

33

In 2012, the Florida agency policy required, “The destination and purpose of each trip must 

be specified, and should be stated in clear, concise, and descriptive language in order to 

indicate that the travel is necessary and will be performed on official FHFC business,” and 

required a copy of the course agenda to be attached. But SIGTARP found that Florida 

officials did not enforce those requirements, and did not require the traveler to document

how the conference or training was necessary for HHF, as required by Federal cost 

regulations. In one case, no agenda was attached and, even where agendas were attached,

some did not discuss HHF. There was travel for a state official to speak or make 

 32 Florida Housing Finance Corporation, Report No. 2017-047, November 2016, State of Florida Auditor 

General. 33 Florida Housing Finance Corporation, Report No. 2013-047, November 2012, State of Florida Auditor 

General.
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SIGTARP-19-001 24 March 7, 2019

presentations with no information on what was presented or whether it related to HHF.

As a result, the Florida agency charged TARP one of the highest costs for its officials to 

travel.

Figure 1 reflects that Florida’s Director of Homeownership Programs charged TARP $7,106

for all or a portion of travel to 15 conferences:34

Figure 1. A Florida Agency Top Official Charged TARP to Travel to and Attend 15 Conferences, Some of 

Which Had No Sessions on the Hardest Hit Fund 

Source: Agency-provided data.

 34 Of these costs, $2,922 (four conferences) is included in another finding in this report.
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SIGTARP-19-001 25 March 7, 2019

Figure 2 reflects that a second senior Florida agency official charged TARP $12,962 for 17

conferences:35

Figure 2. A Senior Florida Agency Official Charged TARP to Travel to and Attend 17 Conferences, Some of Which Had 

No Sessions on the Hardest Hit Fund 

Source: Agency-provided data.

Additionally, the Florida agency charged TARP $975 for travel costs in 2016 and 2017 for 

two officials to conduct “realtor training,” with no documentation of what the training was 

about or whether it related to HHF, staying at three luxury hotels lodgings: the Vinoy, 

Renaissance St. Petersburg Resort & Golf Club; the Epicurean Autograph Collection Hotel; 

and the Castle Hotel. 

SIGTARP questions these travel costs as violating Treasury’s contract and Federal cost 

regulations. There was not sufficient documentation that was required showing that 

participation of each individual was necessary to HHF and that the costs were reasonable 

and consistent with the state agency policy. Most of the conferences were unrelated to the 

Hardest Hit Fund.

SIGTARP found that charging TARP for these conferences were not reasonable under 

factors set out in Federal cost regulations. These were not considered ordinary and 

necessary because some other state agencies did not charge for these conferences or 

similar conferences. The individuals did not act with prudence in the circumstances 

considering their responsibilities to the public and the Federal Government, in violation of 

Federal cost regulations. As of October 2015, the time of SIGTARP’s audit, the Florida 

agency was the most underperforming state agency in the program. However, their officials 

were traveling to a significant number of conferences at luxury hotels, at the beach or other 

 35 Of these costs, $10,119 (12 conferences) is included in another finding in this report.
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SIGTARP-19-001 26 March 7, 2019

destinations, while they had one of the highest rates of denying homeowners assistance, 

and the lowest rate of providing HHF assistance. 

SIGTARP found that the Florida agency did not have adequate internal controls to prevent 

these charges to TARP. A Florida agency official told SIGTARP that it had an undocumented 

policy that allowed the traveler to determine the percent of costs to allocate to HHF. The 

Circular A-87 Implementation Guide 2.14 states that in determining whether benefit is 

received for common costs, consideration should be given to the following issues: Would 

the activity still exist, and thereby result in the same costs being incurred, if one program 

were terminated. These were general conferences that the Florida agency is likely to 

continue to attend even though it has announced closing its homeowner assistance HHF 

program, while it continues with its homebuyer down payment assistance HHF program. 

In addition to SIGTARP questioning the NCSHA-related travel as violating Federal 

regulations, SIGTARP questions the non-NCSHA conferences as waste. The Florida agency 

was extravagant, and officials acted inappropriately, charging TARP some or all of the 

conferences costs despite knowing that the conferences were not necessary for HHF.

For example, at the 2012 conference in Orlando, where there was only a 1.5 hour session 

on HHF on the first day, the Florida agency charged TARP for four officials to attend the 

four-day conference. There was not adequate documentation of how the participation of 

each individual was necessary for HHF, violating Federal regulations on travel costs. The 

percentage of cost allocated for each individual was not based on the benefit to HHF as 

required by Federal cost regulations. The state agency charged to TARP 34% of costs for 

the Director of Homeownership Programs to attend. The documentation submitted was the 

conference agenda with certain sessions circled. Of those circled, only the 1.5 hours the 

first day related to HHF, with most relating to general business issues such as information 

technology, human resources, communications, websites and social media. The state 

agency charged 100% of $1,607 for two officials to attend the four-day conference, with no 

documentation justifying the benefit to HHF, what sessions were attended, or why these 

individuals’ participation benefitted HHF (as Federal cost regulations require) when the 

Director of Homeownership programs attended the Treasury meeting.36

A few weeks after these charges, in November 2012, the State of Florida Auditor General 

issued an audit that included, “Finding No. 8: The Corporation’s cost allocation 

methodology was not adequate to ensure that costs were allocated to Federal awards 

programs in an appropriate and equitable manner.” Report that the Florida agency’s cost 

allocation of administrative costs to each of its Federal award programs, including the HHF 

program, did not ensure compliance with OMB Circular A-87, “...some costs allocated to 

Federal award programs may not be allowable.”37

 36 The Assistant Director of Homeownership programs also charged TARP to stay an extra night at the hotel 

to participate in a conference by Counselor Direct related to HHF on October 24. However, the agenda for 

that conference lists the year as 2011, not 2012, which is not adequate documentation to support the 

charge, and should have been caught by internal controls. 37 Florida Housing Finance Corporation, Report No. 2013-047, November 2012, State of Florida Auditor 

General.
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SIGTARP-19-001 27 March 7, 2019

After the 2012 Auditor General report, the Florida state agency continued charging TARP

disproportionate amounts to attend the 2013 conference in New Orleans, where there was 

only a 1.5 hour session on HHF. The Florida agency charged TARP for three officials to 

attend for four days, charging 100% of the costs for one official, 50% of the cost for another 

official, and 30% for the Director of Homeownership Programs. There was no justification 

of how these percentages benefitted HHF given the conference agenda. Given these 

warnings, SIGTARP finds that the Florida agency’s charges to TARP for these conferences 

constituted waste and abuse.38

The Florida agency charged TARP for its officials to travel to the agency’s 

monthly board meetings, an annual Florida housing conference, and other 

conferences and travel where there was no documentation that the travel was 

necessary for HHF, violating Federal cost regulations

SIGTARP also questions travel and conferences charged to TARP that violated Federal cost 

regulations’ requirement that travel cost “documentation must justify that: (1) 

participation of the individual is necessary to the Federal award [the Hardest Hit Fund]; 

and (2) the costs are reasonable and consistent with non-federal entity’s established travel 

policy.” In many instances, it also violated the Federal regulations’ requirement that the 

cost “be adequately documented:” 

Annual Florida Housing Coalition Conference: $7,469

The Florida agency charged TARP almost $8,00039 for all or part of the cost for its officials 

to travel to and attend the three-day annual Florida Housing Coalition Conference every 

year. The fact that those officials may have worked on HHF is insufficient under the 

Federal regulations to justify the charge to TARP. The agency lacked documentation that 

justified that the participation of the individual was necessary for HHF, as required by 

Federal cost regulations. The agendas attached to the 2012, 2013, 2014, 2015 and 2016 

conference did not discuss HHF. Additionally, after Congress authorized an additional $2 

billion for HHF in the 2016 appropriations law, the Florida agency significantly deviated 

from its prior practice, doubling the number of officials attending this conference charged 

to TARP, unjustifiably increasing the cost nearly three times the prior year.

Florida Agency Board Meetings: $7,808

The Florida agency charged TARP $7,808 for its officials to attend the agency’s monthly 

board meetings in different Florida cities in late 2013 through 2015. TARP should not pay 

travel for the agency’s regular board meetings, as that violates the Federal cost regulations’

cost allocation requirements. Travelers either charged 100% or a portion to TARP whether 

HHF was discussed or not. The Circular A-87 Implementation Guide 2.14 states that, in 

 38 GAO defines waste as “the act of using or expending resources carelessly, extravagantly, or to no purpose,” 

in its Standards for Internal Control in the Federal Government (the Green Book). GAO has also described 

waste as: “...taxpayers do not receive reasonable value for money in connection with any governmentfunded activity due to inappropriate acts or omissions by officials with control over or access to 

government resources.” 39 Of these costs, $3,307 is included in the costs questioned in another finding in this report.
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SIGTARP-19-001 28 March 7, 2019

determining whether benefit is received for common costs, consideration should be 

given to whether the activity would still exist, and thereby result in the same costs being 

incurred, if one program were terminated. The state agency would still have regular board 

meetings absent HHF. Additionally, these charges violated Federal regulations’

requirement that the cost be reasonable under the relevant factors. These include that it 

was not ordinary and necessary, as other state agencies did not charge TARP for travel to 

their regular board meetings. The agency also significantly deviated from past practice as it 

did not charge TARP for these meetings in prior years. The charge also violated the Federal 

regulations’ requirement that the cost be “adequately documented,” as often the board 

meeting minutes that reflected each person present did not include the name of the 

traveler. The officials often traveled three days prior to the board meeting with statements 

that the three days related to HHF meetings or the officials’ participation in trainings, but 

there was no documentation about these meetings, who attended them, or the subject of 

the training.40

SIGTARP also finds that these charges constitute waste. GAO defines waste as “the act of 

using or expending resources carelessly, extravagantly, or to no purpose,” in its Standards 

for Internal Control in the Federal Government (the Green Book). GAO has also described 

waste as: “...taxpayers do not receive reasonable value for their money in connection with 

any government-funded activity due to inappropriate acts or omissions by officials with 

control over or access to government resources.”

Other Florida agency travel and conference charges violated Federal regulations:

• $951 for its communications specialist to travel to Miami for three nights in March 

2016 for “HHF event participation.” There was no agenda or other documentation of 

the event or why the participation of this individual was necessary for HHF. 

• $442 for an official to travel to train the National Foundation for Debt Management 

in February 2016. There was no agenda or other documentation of the event or why 

the participation of this individual was necessary for HHF. 

• $558 for its chief information officer to travel to Atlanta to meet with HUD. There 

was no documentation to show that the CIO’s participation was necessary for HHF.

• $325 for an official to attend the Association of Government Accountants conference 

in 2012 and 2015.

• $840 for two officials to travel on three trips in 2016 and 2017 to conduct “realtor 

training,” with no documentation of what the training was about or whether it 

related to HHF. Even if this related to the HHF down payment assistance program, 

the Florida agency also runs a state-funded DPA program. The Florida agency split 

the cost for two of these trips charging TARP 50% and 75%, but charged 100% of 

the cost for the other trip. 

 40 The travelers to the board meetings included the two senior officials referenced earlier in the report and 

the communications specialist, the graphics designer, and other officials. 
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SIGTARP-19-001 29 March 7, 2019

After the Ohio Agency Decided to Close the HHF 

Program to Homeowner Applications in 2014, it 

Significantly Deviated from Past Practices By Charging 

TARP More Than $7,000 to Hold Conferences for Housing 

Counselors at Zoos, and More Than $28,000 for Travel of 

13 Officials to Conferences When it Previously Charged 

for 1-3 Officials

The Ohio agency was one of the state agencies that was more effective than others at 

distributing HHF assistance to homeowners and, as a result, it closed the program to new 

homeowner applications earlier than most state agencies. According to a news story, on 

February 14, 2014, the Ohio agency reportedly announced on a call with housing 

counselors that it would cease accepting applications to the Hardest Hit Fund’s homeowner 

program Save the Dream Ohio by April 30, 2014.41 The Ohio agency did close the programs 

to new homeowner applications on April 30, 2014.

SIGTARP found that in 2014 and 2015 (prior to re-opening the program in 2016 after 

Congress authorized additional funding), the Ohio agency significantly deviated from 

established practices, which led to unjustifiable increases in charges to TARP for 

conference and travel. Under the Federal regulations, significant deviations from 

established practices is a factor in determining that an expense is not reasonable, and 

therefore unallowable. First, on February 10, 12, and 13, 2014, the Ohio agency charged 

TARP $7,229 to host housing counselor conferences at three zoos. SIGTARP previously 

questioned the food costs associated with these events, but now includes other costs 

including an “Animal Presentation.” The Ohio agency reportedly made the call announcing 

it would cease accepting applications one day after the last zoo conference. One of the 

agendas for the zoo conference shows that the HHF program was in wind-down. Second, on 

May 19, 2014, 19 days after the program closed to new applications, the Ohio agency 

charged TARP for 9 officials to travel to the NeighborWorks Institute conference, and 

subsequently four more officials, when in the past the agency had charged TARP for one, 

two, or three officials to attend.

Zoo Conferences

The Ohio agency significantly deviated from established practices when it hosted 

conferences at zoos, which unjustifiably increased the costs to TARP. The zoo costs totaled 

 41 See Cleveland.com, “Save the Dream Ohio to stop receiving applications,” February 21, 2014, 

https://www.cleveland.com/open/index.ssf/2014/02/save_the_dream_ohio_to_stop_re.html, accessed 

2/8/2019; Cincinnati Enquirer, “Save the Dream Ohio Winding Down,” April 14, 2014.

https://www.cincinnati.com/story/money/2014/04/14/save-dream-ohio-ending/7711897, accessed 

2/8/2019. 
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SIGTARP-19-001 30 March 7, 2019

$7,229,42 which more than tripled the costs charged to TARP compared to the 2nd quarter 

2013 housing counselor conference total of $2,223. For the 2nd quarter 2013 conferences, 

the Ohio agency kept costs low by use of a free room in each town and going to the grocery 

store.43 This included: (1) a free room in Cincinnati at the Community Action Agency and 

$370 for bagels, donuts and coffee from Dunkin Donuts, ice, and sandwiches; (2) a free 

room in Reynoldsburg from the Ohio Department of Commerce and $930 for grocery store 

soda and water, delivered sandwiches, and candy from Target; and (3) a free room in 

Canton and $922 on supplies from Target and delivered sandwiches.

The Ohio agency had never charged TARP to hold a conference at an entertainment venue 

until it did so with the zoos, which violated a number of Federal regulations. First, SIGTARP 

questions the costs as “costs of entertainment, including amusement, diversion, and social 

activities,” which violates Federal cost regulations. The Ohio agency’s written justification 

was that the zoos offered “a unique experience to our subgrantees.” For example, there 

were costs for zoo admissions, and an Animal Presentation at all three of the conferences, 

which are entertainment costs. The Columbus Zoo receipt itemizes zoo admissions ($53) 

and an “Animal Presentation” ($350). The Ohio agency similarly charged TARP $262 for 

admission and parking at the Cincinnati Zoo, and the cost of the Animal Encounter was not 

itemized from the $600 facility rental. The Cleveland Zoo venue charge of $600 included 

the Animal Presentation, which was not itemized, and to pay $30 an hour for a Cleveland 

Metroparks Ranger who was required to be present at all events.

The Federal cost regulations also provide that any costs directly associated with 

entertainment/social costs “(such as tickets to shows or sports events, meals, lodging, 

rentals, transportation, and gratuities) are unallowable,” and therefore SIGTARP questions 

the costs associated with holding the conferences at the zoos. For example, the Ohio agency 

charged TARP: (1) $359 for an “All day beverage,” $420 for breakfast and $900 for lunch at 

the Columbus Zoo; (2) $313 for breakfast, $488 for lunch, $103 for a 4-hour afternoon 

“Cold beverage service,” and a $172 service charge at the Cincinnati Zoo; and (3) at the 

Cleveland Zoo, $716 for breakfast, $700 for lunch, and a $269 service charge. 

SIGTARP also questions the costs as violating the Federal regulations’ requirements that 

“conference hosts must exercise discretion and judgment in ensuring that conference costs 

are appropriate, necessary, and managed in a manner that minimizes costs to the Federal 

award.”44 The choices made by agency officials did not minimize costs to TARP, and agency 

officials did not exercise discretion and judgment to ensure appropriate costs.

SIGTARP also questions the costs as violating the Federal cost regulations' requirement 

that the cost be reasonable under the factors stated in the regulations. It was not generally 

recognized as ordinary and necessary to hold conferences at zoos, there was no 

documentation that the agency looked at market prices for comparable services, the 

 42 Of the $7,229 that SIGTARP questions as violating Federal cost regulations, SIGTARP previously questioned 

$5,691 of these charges in its 2017 audit, Unnecessary Expenses Charged to the Hardest Hit Fund. These 

charges have not been repaid. 43 In December 2013, three months before it announced the program in wind down, the Ohio agency held one 

conference at the Quest Conference Center in Columbus, tripling the charge to TARP to $6,927. 44 2 CFR 200.432.
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SIGTARP-19-001 31 March 7, 2019

officials did not act with prudence, and the agency significantly deviated from established 

practices.

SIGTARP also questions the costs as violating the Federal regulations’ requirement that 

costs must be allocable to HHF. The Circular A-87 Implementation Guide provides, “that 

where a cost or activity benefits multiple activities or programs, those costs must be 

allocated in accordance with the relative benefits received for each activity or program.” 

The Ohio agency charged 100% of the costs to TARP, when the conference would have 

benefitted their non-HHF programs, as conferences involve networking and non-HHF 

discussions. At the next conference in June 2014, the Ohio agency split the cost 50/50 

between TARP and a state program, but charged 100% of the costs of these zoo 

conferences to HHF. 

SIGTARP also questions these and other costs totaling $7,229 as waste. 45 Federal taxpayers 

did not receive reasonable value for money, as there was no additional value to Federal 

taxpayers as to whether the conference was held in a free room with grocery store drinks 

and delivered sandwiches versus a fully catered zoo experience with facility rental charges, 

all-day beverages, and on-site service staff. This lack of reasonable value to taxpayers was 

due to the inappropriate acts of these officials that had access to TARP dollars. The choice 

of zoos as a location was also extravagant, and taxpayers unjustifiably had to pay more than 

was necessary due to the inappropriate actions of the Ohio agency officials in approving 

these charges to TARP after closing the program to applications and declaring it in winddown.

Travel for NeighborWorks Institute Training Conferences 

After April 30, 2014, when the Ohio agency stopped taking homeowner applications for the 

Hardest Hit Fund homeowner program, with the program in wind down, the Ohio agency 

significantly deviated from its established practice by charging TARP travel for a large 

number of officials to attend NeighborWorks Training conferences. 

The Ohio agency had an established practice for these conferences:

 In December 2010, the Ohio agency charged TARP $2,924 for travel and conference 

registration fees for one official (the Assistant Grant Manager) to attend a five-day 

NeighborWorks Training conference session on homeowner counseling for program 

managers, at the National Harbor.46

 45 GAO defines waste as “the act of using or expending resources carelessly, extravagantly, or to no purpose,” 

in its Standards for Internal Control in the Federal Government (the Green Book). GAO has also described 

waste as: “...taxpayers do not receive reasonable value for money in connection with any governmentfunded activity due to inappropriate acts or omissions by officials with control over or access to 

government resources.” 46 Conference materials describe the session as leaving managers better equipped to manage the day-to-day 

operations of a housing counseling program, including diversified funding sources, recruit, manage and 

retain counseling staff, perform contract reviews and programmatic assessments, and efficiently manage 

case files. 
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SIGTARP-19-001 32 March 7, 2019

 In 2011, the Ohio agency charged TARP $5,301 for travel and conference 

registration fees for two different officials (the Underwriting Coordinator and the 

Counseling Coordinator) to attend the same five-day NeighborWorks Training 

conference session on homeowner counseling for program managers in Los Angeles. 

 The Ohio agency did not charge TARP for any official to attend the conference in 

2012. 

 In 2013, the Ohio agency charged TARP $7,491 for travel and conference 

registration fees for three different officials (the Grants Coordinator, the Assistant 

Housing Counseling Manager, and the HHF Counseling Coordinator), to attend the 

same five-day NeighborWorks Training conference session on homeowner 

counseling for program managers in Kansas City.

Technically, all of these NeighborWorks Institute training conferences violated Federal cost 

regulations. As then-Treasury Secretary Geithner stated in 2010, “Broad foreclosure 

counseling services cannot be funded through programs such as the HFA Hardest Hit Fund 

that are authorized under the Emergency Economic Stabilization Act.”47What is most 

concerning are the charges after the Ohio agency closed the program.

The Ohio agency subsequently significantly deviated from its established practice: 

1. Weeks after closing the program to new homeowner applications, the Ohio agency 

charged TARP $17,807 for travel and conference fees for 9 officials in May 2014 for 

the five-day NeighborWorks Training conference in Louisville, Kentucky. The 

training costs were around $1,300 per person. The documentation did not include 

information on the individual’s title or how that individual’s participation was 

necessary for HHF. The documents stated that the conference was relevant to the 

work the attendees do under HHF and non-HHF programs, but the agency charged 

100% to TARP. The conference sessions were also different. For example, officials 

attended sessions on “Advanced Foreclosure,” and “Default Counseling.” 

2. The Ohio agency also charged TARP $7,763 for travel and conference fees for three

officials for the December 2014 NeighborWorks Training in Washington, D.C. The 

agenda had broad housing topics on how housing relates to health. One official 

attended conference sessions on “Financial Coaching.” Another official attended 

conference session on Connecting Health, Housing and Community.” There was no 

documentation for the conference session attended by the third official. There was 

no documentation that justified how each individual’s participation was necessary 

for HHF.

3. The Ohio agency charged TARP $3,114 for travel and conference fees for one official 

for the February 2015 NeighborWorks Training in Los Angeles to attend sessions on 

“Financial Education” and “Financial Coaching.”

 47 Other states charged TARP for the NeighborWorks Institute training conferences. We question all of these 

costs. Treasury should analyze the Federal regulations and recover the unallowable charges.
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SIGTARP-19-001 33 March 7, 2019

SIGTARP questions the $28,684 in charges after Ohio closed its program as violating 

Federal cost regulations, including $14,484 in travel costs and $14,200 in training costs. 

For the travel costs, there was no documentation as required by Federal regulations. Those 

regulations require “documentation must justify that: (1) participation of the individual is 

necessary to the Federal award; and (2) the costs are reasonable and consistent with nonfederal entity’s established travel policy.” At the height of the HHF program in Ohio in 2013, 

the Ohio agency only determined that the participation for three officials was necessary for 

HHF. There was no documentation justifying the expansion to 9 officials and subsequently 

four more, after Ohio HHF was in wind down and closed to applications. There was also no 

documentation justifying the expansion to financial education or coaching. The costs were 

not reasonable according to the reasonableness factors in the Federal regulations. The Ohio 

agency significantly deviated from past practices, there was no documentation that the 

agency looked at market prices for comparable services particularly because many or 

perhaps all of the conference sessions were online, and the officials did not act with 

prudence. 

SIGTARP also questions the training and travel costs as violating the Federal regulations’

general test that a charge be allocable to HHF. The Ohio agency should not have charged 

100% of the costs of conferences on general housing matters to TARP when the agency’s 

own documents stated that would benefit the state agency’s other non-HHF programs. 

SIGTARP also finds that these charges constitute waste. Federal taxpayers did not receive 

reasonable value as there was no additional value to HHF for these 13 officials to travel to 

the conferences and the conference fees for a program in wind down. There was also no 

purpose to HHF for the expansion of the number of officials and different conference 

sessions than previously attended. Taxpayers unjustifiably had to pay more than was 

necessary due to the inappropriate actions of the Ohio agency officials in expanding from 

three officials to nine officials, and then four more, after closing the program to 

applications.
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SIGTARP-19-001 34 March 7, 2019

The Nevada Contractor NAHAC Alleged in Court Filings 

that an Official Charged TARP for a Personal Weekend 

Trip to a Las Vegas Casino, But Did Not Reimburse 

Treasury $543 for the Travel and then Charged TARP For 

$37,298 in Investigation and Litigation Costs Related to 

Termination of the Official

NAHAC filed pleadings in a state court wrongful termination proceeding that it terminated 

an official after a third-party investigation verified that the official had engaged in 

improper conduct. The private investigator report included statements that the official,

based outside of Las Vegas, extended a work trip to the Las Vegas office over a weekend in 

December 2014 to see the official’s daughter perform in a cheerleading competition at the 

Mirage Casino & Resort. NAHAC had previously charged the entire week’s travel costs to 

TARP, including Saturday and Sunday even though the official did not work those days. 

SIGTARP questions $543 in travel costs as violating the Federal regulations.48 Federal 

regulations only allow travel costs “incurred by employees who are in travel status on 

official business of the non-Federal entity.”49 NAHAC took the position in state court that 

the weekend was personal travel not official business, but did not repay TARP. The Federal 

regulations require that travel costs result in “charges consistent with those normally 

allowed in like circumstances in the non-Federal entity’s non-federally-funded activities 

and in accordance with non-Federal entity’s written travel reimbursement policies.” 

NAHAC took the litigation position that the travel violated its policy against organization 

funds used for personal expenses.

Flowing from the unallowable travel costs, NAHAC charged TARP at least $37,298 for: 

• $12,845 for a private investigator, computer forensics expert, and lawyer;50

• At least $22,569 in legal fees and costs related to: (1) NAHAC terminating the official 

in February 2015, in part based on its allegation that the official charged TARP for 

personal travel unrelated to HHF; and (2) to defend a wrongful termination suit by 

the official;51

 48 The weekend travel costs were $543 (2/7 of the cost of a weeklong package at the casino). The traveler 

paid out-of-pocket for the $101 rental car upgrade. 49 2 CFR § 200.474. OMB Circular A-87 attachment B, 43a. 50 SIGTARP previously questioned these charges in its report, Waste and Abuse in the Hardest Hit Fund 

Nevada, September 9, 2016. However, NAHAC has not repaid Treasury for these charges.

51 There may be additional legal fees, as the relevant legal invoices did not separately itemize the legal fees 

pertaining to this official. The failure to itemize the legal fees violates the “adequate documentation” 

requirement of Federal cost regulations. 
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SIGTARP-19-001 35 March 7, 2019

• $1,884 in travel for NAHAC’s CEO and one lawyer to travel for depositions in the 

litigation.52

SIGTARP questions these investigation and litigation charges as violating the Federal 

regulations’ tests that the cost be “necessary and reasonable for proper and efficient 

performance and administration of Federal awards.” GAO has described the “necessary 

expense” doctrine of appropriations law in its Redbook as, “The expenditure must bear a 

logical relationship to the appropriation sought to be charged. In other words, it must make 

a direct contribution to carrying out either a specific appropriation or an authorized agency 

function for which more general appropriations are available.” These costs were not 

necessary for HHF because NAHAC took the position that it terminated the official for 

inappropriate conduct found in an investigation, and the investigation report included the 

statements that the weekend casino travel was personal travel. The subsequent 

investigation and litigation costs that flow from that are not necessary for proper and 

efficient performance and administration of Federal awards. These costs bear no logical 

relationship to Congress’s intent or EESA. 

The investigation and litigation charges to TARP were also not reasonable, as these charges 

were for general operations, not HHF. OMB has warned that, “The question of 

reasonableness is particularly important when governmental units or components are 

predominantly federally-funded,” which is the case with NAHAC. 

These costs do not pass the reasonableness factors set forth in the Federal regulations. 

First, the nature and amount of the investigation and litigation costs for matters flowing 

from the employee’s alleged inappropriate conduct “exceed[s] that which would be 

incurred by a prudent person under the circumstances prevailing at the time the decision 

was made to incur the costs.” The investigation report was dated January 2015, and the 

subsequent termination and litigation took place from 2015 to 2018. As SIGTARP 

previously reported, SIGTARP found that during 2015 NAHAC “took homeowner rescue 

dollars for itself, at the same time it all but stopped helping homeowners.”53 NAHAC 

admitted only 117 Nevada homeowners into the program in 2015, a nearly 95% decrease 

from 2012 and 2013. In 2015, 85% of the 805 homeowners who applied for HHF did not 

receive HHF assistance, despite the fact that it had almost $100 million available for 

homeowners at the start of 2015. In 2015, NAHAC kept one TARP dollar for every TARP 

dollar it gave to a homeowner. NAHAC kept for itself more than $1.4 million of the $2.4 

million in TARP dollars spent in administrative expenses in Nevada that year. For half of 

2015, NAHAC spent more on its expenses than it provided to homeowners. NAHAC spent 

$1.2 million on its expenses, almost $250,000 more than it provided to homeowners.

Second, the charges were not reasonable under the factors in the Federal regulations 

because NAHAC officials did not act prudently in the circumstances considering their 

responsibilities to the governmental unit, its employees, the public at large, and the Federal 

Government. Rather than distribute TARP dollars to Nevada homeowners for foreclosure 

 52 This violates the Federal regulations’ requirements for travel. There was no documentation that justified 

how the CEO testifying on an official’s termination in part based on personal travel charged to TARP was 

necessary for the successful performance of HHF.

53 See SIGTARP, Waste and Abuse in the Hardest Hit Fund Nevada, September 9, 2016. 
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SIGTARP-19-001 36 March 7, 2019

prevention as Congress intended, NAHAC charged TARP to investigate and litigate with a 

former employee, while denying homeowners for those same funds. Those TARP dollars 

could have assisted a number of homeowners avoid foreclosure. 

SIGTARP also questions the charges as violating the Federal regulation’s requirement that a 

cost be allocable to the Federal award: “Circular A-87 requires that where a cost or activity 

benefits multiple activities or programs, those costs must be allocated in accordance with 

the relative benefits received by each activity or program.” The HHF program was harmed, 

not benefitted, from distributing TARP dollars to lawyers and private investigators rather 

than homeowners. NAHAC engaged in inappropriate cost shifting.54 The investigation and 

litigation costs were NAHAC business costs that provided no benefit to HHF. Because 

NAHAC is restricted from state funds as it is not a state agency, it passed these costs onto 

Federal taxpayers inappropriately.

Finally, SIGTARP questions these investigation and litigation costs as waste. Federal 

taxpayers did not receive reasonable value for money from this investigation and litigation 

as NAHAC all but stopped admitting homeowners into HHF. NAHAC officials with access to 

TARP dollars engaged in inappropriate acts to gain access to TARP dollars for these costs.

 54 Circular A-87 Implementation Guide 2.8.2 states, “any cost allocable to a particular Federal award or cost 

objective under the principles in A-87 may not be charged to other Federal awards to overcome fund 

deficiencies, to avoid restrictions imposed by law or terms of the Federal awards, or for other reasons. 

Such a practice constitutes unallowable cost shifting.” 
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SIGTARP-19-001 37 March 7, 2019

The North Carolina Agency Violated Treasury’s Contract 

and Federal Regulations When It Charged TARP Nearly 

$130,000 to Host Annual Housing Counselor Conferences 

that Included Social Activities and Other Broad Housing 

Conferences

In the 2017 audit, SIGTARP found $107,578 in waste, abuse, and squandered TARP dollars 

costs by the North Carolina Housing Finance Agency in violation of Treasury’s contract and 

Federal cost regulations. As SIGTARP reported in that audit:

SIGTARP found that the North Carolina agency’s culture involves regularly charging for 

expenses that other state agencies were not charging. According to the North Carolina 

Housing Finance Agency, “the game changer” was being selected by Treasury to receive 

$482.8 million in the Hardest Hit Fund. Previously, the state agency operated a small, 

focused state program from 2005 to 2010, receiving $12.4 million in non-TARP grants. 

SIGTARP found that TARP was not only a “game changer” in the number of people who 

could be helped by the North Carolina agency, but also in the number of dollars now 

available for spending. The TARP funding was 38 times the total amount of grants the 

North Carolina agency previously received. The culture at the North Carolina agency was 

that officials could use almost any justification to charge TARP for barbeques, parties, 

celebrations, restaurant outings, gifts, gym memberships, regular employee meals, and 

employee cash bonuses.55 

In this audit, SIGTARP found that same culture included violating Federal regulations to 

spend TARP dollars to host conferences and for travel. SIGTARP questions $127,101.56

The North Carolina agency was one of two states that charged TARP to host annual housing 

counselor conferences. The state agency also charged TARP for housing counselors to 

travel to these conferences. This shifted agency operating costs onto TARP in violation of 

Treasury’s strict prohibition against using TARP dollars for broad housing counselor 

expenses. Treasury’s contract with the North Carolina agency explicitly limited “Permitted 

Expenses” under the category of “Counseling” to “File intake, decision costs, successful file, 

key business partners on-going.” The agency also violated Federal cost regulations. 

SIGTARP also found waste. There were extravagant dinners and receptions charged to 

TARP. Gifts, awards, and decorations were charged to TARP. In 2011, 2012, and 2016, 

housing counselors and agency officials got a new custom Lands’ End shirt in different 

colors and styles. There were 66 shirts charged to TARP in 2011, another 44 shirts charged 

 55 For example, although the regulations allow limited occasions for food costs, the regulations do not allow a 

steak and seafood lunches, or catered barbeques for 60 or 90 people with décor and other charges. These 

were not necessary or reasonable expenses.

56 Of the $127,101 that SIGTARP questions as violating Federal cost regulations, SIGTARP previously 

questioned approximately $26,000 in its 2017 audit report, Unnecessary Expenses Charged to the Hardest 

Hit Fund. North Carolina has only repaid approximately $10,000 of those costs.
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SIGTARP-19-001 38 March 7, 2019

in 2012, and 44 shirts in 2016. These perks of the conferences were neither necessary for 

HHF nor reasonable. These charges violated the Federal cost regulations.

SIGTARP found that the North Carolina agency treated TARP as a deep pocket. North 

Carolina homeowners could have benefitted from the wasted dollars. SIGTARP questions:

 $3,130 in prohibited entertainment/social activities costs in 2010 before any 

homeowner had received HHF, for an evening reception for housing counselors. 

Costs included $855 for a carving station with beef, $153 for a uniformed chef to 

carve the beef, a “Display of Mousse Shooters of the Season, Cake Bites, and 

Strawberry Shortcake Martinis,” Imported and Domestic Cheese Display, fruit, and 

a “Bruschetta and Flat Bread Station.”

 $41,626, which was 100% of the costs to host the North Carolina agency’s 2013

annual housing counselor conference, including a Thank You dinner for 160

people, a speaker on Motivation by Chocolate, decorations, housing counselor 

awards, and other items, and travel for housing counselors to attend. The agenda 

largely included non-HHF matters, with HHF only a small part of the second day of 

the two-day conference.

 $32,090, which was 100% of the 2011 and 2012 travel costs and conference 

registration fees for 102 housing counselors to attend the NC Affordable Housing 

Conference that the North Carolina agency co-hosted, where HHF was not on the 

agenda.

 $15,537 in prohibited entertainment/social activities costs at annual HHF 

conferences in 2011 and 2012, including costs associated with an ice 

cream/dessert social activities, custom Lands’ End shirts, awards, flowers, and 

toys like light-up yoyos and novelty rings.

 $1,511 for lunch at the 2011 HHF conference when the agenda said that lunch for 

attendees was “on-their-own.” 

 $13,852, which was 100% of the costs to host the North Carolina agency’s 2016 

annual housing counselor conference after Congress authorized new TARP 

dollars, including gifts, housing counselor awards, and travel for housing 

counselors to attend. The agenda included non-HHF matters. 

 $14,777 for the North Carolina agency to pay for the Town of Garner’s Job Search 

Boot camp in 2014, including a motivational speaker and to buy 120 copies of his 

book. At that time, Treasury had not approved TARP to be used for job search 

efforts, and had declined another state agency’s request for TARP to fund general 

job search efforts.

 $2,820 in costs for housing counselors to attend conferences on general housing 

issues for continuing education credits for their housing counselor certification.
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SIGTARP-19-001 39 March 7, 2019

 $1,758 in costs for North Carolina agency officials to attend conferences on 

general housing issues without adequate documentation justifying that the

participation of each individual was necessary for HHF.

In 2010, before any homeowners had received a dollar from HHF, the North 

Carolina agency violated Federal regulations by charging TARP $3,130 for an 

evening reception for housing counselors, including a uniformed chef at a carving 

station, and gourmet desserts including “Strawberry Shortcake Martinis, Cake 

Bites, and Mousse Shooters of the Season”

SIGTARP questions as prohibited entertainment/social activities costs the North Carolina 

agency’s charge to TARP of $3,130 for an evening reception for 100 people on 

September 15, 2010, before the agency had provided a dollar to any North Carolina 

homeowner. The North Carolina agency reported to Treasury launching an HHF pilot 

program October 18, 2010, with a statewide launch on December 1, 2010.57 As of 

September 30, 2010, the state agency reported no applicants to the program. This is 

because the HHF program had not yet opened. The HHF program provided mortgage 

assistance to unemployed homeowners. In 2010, North Carolina’s unemployment rate was 

10.6%, which was above the national average of 9.6%. The reception was held at a 

convention center in the evening after a conference on HHF hosted by the agency ended at 

5:00 pm. Following the conference, the North Carolina agency hosted a “Reception” in a 

separate room from 5:00 pm to 6:30 pm. 

Federal cost regulations provide that the costs of entertainment, including amusement, 

diversion, and social activities, and any costs directly associated with social activities (such 

as tickets to shows or sports events, meals, lodging, rentals, transportation, and gratuities) 

are unallowable. The North Carolina agency charged the food and service charges of the 

“Reception” to TARP, including a $250 charge for the room rental. Costs charged to TARP 

are shown in Figure 3: 

 57 See Quarterly Performance Report submitted to Treasury for fourth quarter 2010. 
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SIGTARP-19-001 40 March 7, 2019

Figure 3. Costs Charged to TARP for Evening Reception

Note: Sodas were provided throughout the entire conference, including the reception. Documentation provided by the 

North Carolina agency did not separately identify the number of sodas consumed during the conference and at the 

reception. Therefore, SIGTARP questions the entire amount. Note: Costs charged to TARP include 22% service fee 

plus 1% food and beverage tax.

Source: North Carolina agency documentation.

SIGTARP questions the reception charges as violating a number of Federal cost regulations:

• The reception was a social activity, and therefore all associated costs are 

unallowable under the Federal cost regulation. 

• The reception charges also violated the Federal regulations’ limit on costs for 

conferences to “a meeting, retreat, seminar, symposium, workshop or event 

whose primary purpose is the dissemination of technical information beyond the 

non-Federal entity and is necessary and reasonable for successful performance 

under the Federal award. The primary purpose of the reception was not the 

dissemination of technical information for HHF. The reception was not necessary 

for HHF.

• The reception costs also were not reasonable because the individuals did not act 

with prudence in the circumstances considering their responsibilities to the public 

and the Federal Government. OMB has warned that, “The question of 

reasonableness is particularly important when governmental units or components 

are predominantly federally funded.” The Executive Director of the North Carolina 
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SIGTARP-19-001 41 March 7, 2019

agency testified to the Joint Appropriations Subcommittee on General 

Government in 2013, “...no state appropriations [are] used for staff or operating 

expenses.” On its website, the agency refers to itself as “A Self-Supporting Public 

Agency.” The agency’s Executive Director testified in 2013 that the agency’s 

operating expenditures grew from $13 million in 2011, to more than $17 million 

in 2012, to nearly $21 million in 2013, with the Hardest Hit Fund as the primary 

source of its operating budget. 

Federal cost regulations require conference hosts/sponsors to exercise discretion and 

judgment in ensuring that conference costs are appropriate, necessary, and managed in a 

manner that minimizes costs to the Federal award. The reception was not necessary or 

reasonable for HHF. State agency officials did not exercise discretion and judgment to 

ensure costs were appropriate, necessary and managed to minimize the cost to TARP. 

• The reception charges violate the Federal cost regulations’ requirement that costs 

conform with limitations on the Federal award. Treasury’s contract explicitly 

limited “Permitted Expenses” under the category of “Counseling” to “File intake, 

decision costs, successful file, and key business partners on-going.” Treasury did not 

permit receptions for counselors.

• The reception charges also violated the North Carolina state agency’s policy that all 

meal expenses must be able to withstand public scrutiny. Distributing TARP dollars 

in a foreclosure prevention program to a convention center to pay for a uniformed 

chef at a carving station, a bruschetta bar, and for gourmet desserts, rather than 

distribute those funds to North Carolina homeowners does not withstand public 

scrutiny. The fact that the convention center received TARP dollars before any 

homeowners received TARP dollars is particularly concerning. 

SIGTARP finds that the Reception charges also constitute waste and abuse. GAO defines 

waste as “the act of using or expending resources carelessly, extravagantly, or to no 

purpose,” in its Standards for Internal Control in the Federal Government (the Green Book). 

GAO has also described waste as: “...taxpayers do not receive reasonable value for money in 

connection with any government-funded activity due to inappropriate acts or omissions by 

officials with control over or access to government resources.” The reception was 

extravagant, had no purpose for TARP, and taxpayers did not receive reasonable value for 

these costs due to the inappropriate acts by state officials. According to GAO, abuse 

involves behavior that is deficient or improper when compared to behavior that a prudent 

person would consider reasonable and necessary. This includes the misuse of authority or 

position for personal gain or for the benefit of another. State officials misused their 

authority to benefit housing counselors with the reception. Their behavior was deficient 

and improper, particularly given that they had not distributed one dollar of HHF to 

homeowners.
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SIGTARP-19-001 42 March 7, 2019

The North Carolina agency violated Treasury’s contract and Federal 

regulations by charging TARP $41,626 to hold its 2013 annual conference with 

housing counselors, charging TARP for a professional speaker who spoke on 

“Motivation by Chocolate,” hotel rooms for more than 100 people, and a Thank 

You dinner for 160 people

The North Carolina agency charged TARP 100% of costs ($41,626) to host its 2013 annual 

housing counselor conference, travel costs for more than 100 people, and a Thank You 

dinner for 160 people (Figure 4). In a report to Treasury, the North Carolina agency 

referred to the conference as a celebration, stating, “We celebrated counselors for their 

work preventing foreclosures. We also provided new marketing materials for distribution 

to homeowners.” 

Figure 4. Charges to TARP for North Carolina’s 2013 Annual Housing Counselor Conference

Note: Some conference costs charged to TARP include 22% in service and administrative fees plus 

6.75% sales tax.

Source: North Carolina agency documentation.

SIGTARP questions these costs as violating Treasury’s contract and several Federal cost regulations.

The Hardest Hit Fund was a program that began in 2010 to help unemployed homeowners avoid 

foreclosure in states that were the hardest hit by the financial crisis. North Carolina was one of those 

states, and North Carolina homeowners were still at risk of foreclosure in 2013. In 2013, North 

Carolina’s unemployment rate was 8%, above the national average. 
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SIGTARP-19-001 43 March 7, 2019

The conference costs do not conform to the limitations of the Federal award set by 

Treasury, as required by Federal regulations.

The Federal regulations require that costs “conform to any limitations or exclusions” for 

HHF as determined by Treasury. At the start of the program in 2010, Treasury determined 

that “certain limited intake and follow-up services” provided by housing counseling 

agencies are eligible for TARP (EESA) funding, but that broader-based foreclosure 

counseling services cannot be funded.58 In 2010, then-Treasury Secretary Geithner 

determined that, “broad foreclosure counseling services cannot be funded through 

programs such as the HFA Hardest Hit Fund that are authorized under the Emergency 

Economic Stabilization Act.”59 Treasury stated, “Such counseling services are not expressly 

authorized by EESA; Congress has otherwise provided federal funding for these services; 

and they are not necessary to the implementation of HFA Hardest Hit Fund programs.”60 In 

2010, Treasury narrowly tailored what was necessary for HHF as: (i) making 

prequalification assessments of eligibility and submitting the qualified applications to the 

HFAs; (ii) obtaining supporting documentation from borrowers; (iii) ensuring that 

borrowers execute the necessary documents for HHF programs; (iv) conducting postclosing meetings with borrowers receiving assistance to ensure that they are complying 

with the HHF programs; and/or (v) verifying the steps that the borrower has taken to find 

a job.”61

Treasury also gave guidance to the state agencies for compliance with EESA:

 Counseling – TARP funds cannot be used to fund counseling programs. However, where 

TARP is funding a mortgage modification program, the TARP funds for that program 

may cover the cost of counseling services that are necessary and incidental to the 

implementation of such program. This means that, to be eligible for TARP funding, the 

counseling must be limited to (i) “triage” counseling for borrowers covering eligibility 

for TARP funded modification programs and/or the application process for TARP 

funded modification programs or (ii) “back end” counseling for borrowers covering 

complaints about or denials from TARP funded modification programs. The counseling

may not cover other services and the HFAs must develop procedures to ensure TARP 

funds are not used to pay for other types of counseling.62

Treasury’s contract with the North Carolina agency explicitly limited “Permitted Expenses” 

under the category of “counseling” to “File intake, decision costs, successful file, key 

business partners on-going.” The North Carolina agency charged TARP for frequent 

training of these same housing counselors on the program, often in-person. Documentation 

for the annual conference, including the Save the Date (Figure 5) and the conference 

 58 See Memorandum for Secretary Geithner from George Madison, September 10, 2010, made public as an 

attachment to 2010 letter to Senator Brown and 2010 letter to Representative Kilroy.

59 See Id. at page 6 and footnote 25. 60 See Id. at page 6 and footnote 25. 61 See Id. at page 7. 62 Email from Squire, Sanders & Dempsey L.L.P. (Treasury’s outside legal counsel) to Ohio HFA officials, on 

May 18, 2010.
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SIGTARP-19-001 44 March 7, 2019

agenda, shows that it went beyond Treasury’s permitted expenses to broad foreclosure

counseling services, which is prohibited.

Figure 5. Save the Date Notice that North Carolina Sent to Attendees

Source: North Carolina agency documentation.

The conference costs were not “necessary, reasonable, appropriate or managed in a 

manner that minimized conference costs” for HHF, violating the Federal regulation 

requirement for conference costs, and the regulations’ general test that all costs be 

necessary and reasonable.63

SIGTARP questions the full costs of the conference as violating the Federal cost regulations 

limitations on conferences. The Federal regulations limit costs for conferences to “a 

meeting, retreat, seminar, symposium, workshop or event whose primary purpose is the 

dissemination of technical information beyond the non-Federal entity and is necessary and 

reasonable for successful performance under the Federal award.”64

Federal cost regulations require conference hosts/sponsors to exercise discretion and 

judgment in ensuring that conference costs are appropriate, necessary, and managed in a 

 63 2 CFR § 200.403. OMB Circular A-87, attachment A, C.1.a. 64 2 CFR § 200.432, Emphasis added. OMB Circular A-87, attachment B, 27 contained similar language.
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SIGTARP-19-001 45 March 7, 2019

manner that minimizes costs to the Federal award. The North Carolina agency told 

Treasury that this conference was a celebration.

Additionally, the fact that most other state agencies in HHF did not charge annual housing 

counselor conferences to TARP evidences that the annual conferences were not necessary 

for HHF. The North Carolina agency had already charged TARP to train the housing 

counselors on triage and back-end counseling. Homeowners could receive assistance 

without the conference. Treasury’s then-General Counsel George Madison previously cited 

these factors as determining that a cost was not necessary for HHF and therefore could not 

be charged to TARP.65

The officials also did not exercise discretion in ensuring that conference costs were 

appropriate, necessary and managed in a manner than minimizes costs to the Federal 

award, as required by Federal cost regulations. Charging TARP for a motivational speaker 

on chocolate, a Thank You dinner for 160 people, invitations to the dinner, a shuttle bus to 

the dinner, a $100 tip for the bus driver, decorations, and awards, was not appropriate, 

necessary or managed in a manner that minimizes costs.

The costs were not reasonable as required by Federal cost regulations. Those regulations 

define reasonable as ordinary and necessary for the performance of the award. Most other 

state agencies did not charge TARP to host their annual housing counselor conferences or 

to “celebrate” housing counselors. Additionally, certain costs such as décor, the celebratory 

dinner, and costs associated with a Motivation by Chocolate speaker were not reasonable. 

The costs also were not reasonable because the individuals did not act with prudence in the 

circumstances considering their responsibilities to the public and the Federal Government. 

$8,809 in costs for the Thank You dinner and the Motivation by Chocolate speaker are 

Entertainment/Social Activities Costs prohibited by Federal cost regulations. 

Federal cost regulations provide that the costs of entertainment, including amusement, 

diversion, and social activities, and any costs directly associated with entertainment/social 

activities (such as tickets to shows or sports events, meals, lodging, rentals, transportation, 

and gratuities) are unallowable. The Thank You dinner for 160 people and all associated 

costs were prohibited social activity costs. This includes $5,589 to the restaurant (which 

included dinner at $23 per person, $200 in mini cupcakes, $400 in virgin cocktails, and a 

$770 gratuity), $120 in invitations for the dinner, $500 for a shuttle bus for the dinner plus 

a $100 tip to the driver.66 The Thank You dinner was also not cost-justified to be charged to 

TARP and does not withstand public scrutiny, as required by the North Carolina agency’s 

policies. Costs associated with the Motivation by Chocolate speaker, including the speaker 

fee and audio visual equipment she required, were also prohibited entertainment costs. 

 65 See SIGTARP, Unnecessary Expenses Charged to Hardest Hit Fund, August 25, 2017. 66 SIGTARP previously identified the dinner in SIGTARP’s 2017 report, Unnecessary Expenses Charged to the 

Hardest Hit Fund, August 25, 2017. The North Carolina agency reimbursed Treasury for some of these costs. 

After that report, SIGTARP identified the conference costs, which similarly should be repaid to Treasury.
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SIGTARP-19-001 46 March 7, 2019

The speaker’s website describes “Motivation by Chocolate” as including “a chocolate 

tasting to demonstrate not only how to appreciate chocolate, but also life itself.” 

$2,369 in costs were not “adequately documented” violating the Federal cost 

regulations’ requirements that costs be adequately documented. 

The receipt for $3,490.62 for the conference site did not match the $5,000 charge to TARP, 

leaving $1,509 without a receipt. 67 The North Carolina agency charged TARP $672 paid to 

the Marriott hotel without a receipt. Receipts for $78 (Spirit of Halloween) and $110

(Staples) are illegible. 

$23,923 in hotel and other travel costs for more than 100 people violated the Federal 

regulation’s requirements for travel costs.

The North Carolina agency charged TARP for hotel rooms and meals for 94 housing 

counselors, in addition to $1,620 for hotel rooms for 14 state agency employees and $90 for 

lunch for 12 state agency employees. The Federal regulations require “documentation must 

justify that: (1) participation of the individual is necessary to the Federal award; and (2) 

the costs are reasonable and consistent with non-federal entity’s established travel policy.” 

The North Carolina agency had no documentation justifying how the participation of 94

people with overnight travel at a celebratory annual conference that did not discuss TARP 

until the second day was necessary for HHF. It was not necessary for the Hardest Hit Fund 

to pay for an overnight stay for anyone because the Hardest Hit Fund was not on the 

agenda until the second day.

There was also no documentation justifying how the participation of state officials staying 

overnight was necessary for HHF. The conference was within driving distance from the 

agency’s office (1.5 hours), so state agency employees could have driven to the conference 

that morning. It appears that the hotel stay allowed these state employees to attend the 

first day of the conference where HHF was not on the agenda and to attend the Thank You 

dinner. Similarly, the state agency employees should have paid for their lunch just as they 

would have on a normal workday. The conference agenda stated that lunch was “on your 

own” and the HHF presentation took place after lunch. These costs also violated North 

Carolina state policy because it does not withstand public scrutiny to have TARP pay for a 

regular annual conference including overnight stays and a dinner when TARP was a small 

part of the second day of the conference agenda.

SIGTARP found that the North Carolina agency engaged in unallowable cost-shifting,

violating the Federal cost regulation’s general test that costs must be “allocable” to the

Federal award.

A cost is allocable to the Federal award if the goods or services are chargeable according to 

the relative benefits received. The North Carolina agency did not allocate the costs, and 

 67 The receipt had handwriting, “This amount does not equal the charge of $5,000. Breakfast was increased 

day of event. Updated receipt is missing.” The $3,490.62 receipt includes $1,550 for room rental, $560 for 

audio visual equipment, and $570.25 for a continental breakfast, which was served during the registration 

prior to the start of the conference, as well as other fees and charges.
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SIGTARP-19-001 47 March 7, 2019

instead inappropriately shifted these conference costs to the Federal government 

through TARP. 68 It appears that they may have been trying to overcome limitations on 

state funds. The Executive Director of the North Carolina agency testified to the Joint 

Appropriations Subcommittee on General Government in 2013, “No state appropriations 

[are] used for staff or operating expenses.” On its website, the agency refers to itself as “A 

Self-Supporting Public Agency.”

SIGTARP finds that the conference charges constitute waste. 

The dinner was extravagant. The speaker had no purpose related to TARP. Taxpayers 

paying for the Hardest Hit Fund did not receive reasonable value for that program due to 

North Carolina officials’ inappropriate acts of using HHF as cover to pay for their annual 

housing counselor conference.

In 2011 and 2012, the North Carolina agency violated Federal regulations by 

inappropriately shifting to TARP $32,090 in travel for housing counselors to 

attend an annual Affordable Housing Conference that did not discuss HHF where 

counselors received continuing education credits

Housing Counselor Travel and Registration Fees for the Affordable Housing Conference

In 2011 and 2012, the North Carolina agency inappropriately shifted to TARP 100% of the 

$32,090 in travel and related costs for housing counselors to attend the annual NC 

Affordable Housing Conference, a conference hosted by the North Carolina agency that did

not discuss HHF. At these conferences, housing counselors receive continuing education 

credits toward their housing counselor recertification, the Association of Housing 

Counselors holds its annual membership meeting, and there is the Housing North Carolina 

Awards Luncheon. The North Carolina agency justified shifting the costs to TARP by adding 

a one-day HHF conference on the day after or before the broader conference, stating its 

reasoning as “to allow counselors to attend both to minimize travel time.” The agency then 

inappropriately charged TARP 100% of the $26,530 travel costs ($11,457 in 2011 and 

$15,073 in 2012) for the housing counselors’ mileage and/or rental car to drive to the 

conference, and to spend two nights in a hotel so that they could attend the other broader 

conference.

SIGTARP questions these costs as inappropriate cost shifting that violates the specific 

Federal cost regulation on travel as well as the general tests that costs be necessary and 

allocable to the Federal award and conform to the limitations of the Federal award. There 

was no documentation as required for travel costs justifying that participation of each 

individual at the broader Affordable Housing Conference is necessary to HHF. There was 

 68 Circular A-87 Implementation Guide 2.8.2 states, “any cost allocable to a particular federal award or cost 

objective under the principles in A-87 may not be charged to other federal awards to overcome fund 

deficiencies, to avoid restrictions imposed by law or terms of the federal awards, or for other reasons. Such 

a practice constitutes unallowable cost shifting.” In this case, the North Carolina agency shifted costs to 

TARP that were not chargeable to TARP.
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SIGTARP-19-001 48 March 7, 2019

no substantive documentation about the Affordable Housing Conference. The broader 

conference did not have sessions on HHF.69 Treasury prohibited broad housing counselor 

expenses. TARP does not pay for housing counselor continuing education credits and 

counselor certifications.

In explanations to SIGTARP, the North Carolina agency officials referred to the one-day 

HHF conference as a separate conference from the Affordable Housing Conference. State 

officials explained to SIGTARP that the Affordable Housing Conference required 

registration fees, but, “The HHF one-day conference was free for housing counselors.” 

Additionally, SIGTARP questions the North Carolina agency’s charge to TARP for $5,560 

registration fees for housing counselors to attend the Affordable Housing Conference as 

violating Federal cost regulations. These fees were not necessary for HHF, as the HHF 

session did not have a fee. They were not allocable to TARP. These charges also did not 

conform to Treasury’s limitation against charging TARP for broad housing counselor costs. 

SIGTARP also concludes that the North Carolina agency committed waste and abuse. These 

actions fit the definition of waste. Taxpayers did not receive reasonable value for these 

charges due to the inappropriate actions of state officials. In 2011 and 2012, North 

Carolina’s unemployment rate was 10.3% and 9.3%, respectively, above the national 

average. The TARP dollars were targeted to unemployed North Carolina homeowners, not 

to fund a state agency’s operation cost beyond what was necessary. These actions also fit 

the definition of abuse. According to GAO, abuse involves behavior that is deficient or 

improper when compared to behavior that a prudent person would consider reasonable 

and necessary. This includes the misuse of authority or position for personal gain or for the 

benefit of another. State officials misused their authority to benefit housing counselors who 

wanted to get their continuing education credits. The state officials used TARP as a deep 

pocket to pay for travel to a conference the agency was co-hosting, which is deficient and 

improper behavior. Given the specific guidance from Treasury and its attorneys to each 

state agency, the North Carolina agency was on notice about Treasury’s limitations against 

charging TARP for broad housing counselor costs such as continuing education credits and 

housing counselor certifications.

In 2011 and 2012, the North Carolina agency violated Federal regulations by 

charging TARP $15,537 for Entertainment/Social Activities Costs at the annual 

HHF conference, and $1,511 for lunch at the 2011 conference when the agenda 

said lunch was “on-their-own”

SIGTARP questions $10,456 in prohibited entertainment/social activities costs for the 

2012 conference. This includes $112 for a cocktail table during the ice cream and dessert 

social activities. Given that there was no receipt for the $7,599 food bill for the ice cream, 

 69 An agenda for the 2012 conference shows sessions were not related to HHF. The sessions were on other 

Government programs, the Attorney General settlement, legislative issues, housing for people with 

disabilities, tax credits, mold and mildew, green construction, down payment assistance, property tax 

valuation, Habitat for Humanity, Medicare and Medicaid. HHF does not involve these issues. An 

announcement of the 2011 conference highlights sessions on neighborhood stabilization, tax credits, 

NIMBY, energy efficiency, greening of developments, health, and legislative issues. 
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SIGTARP-19-001 49 March 7, 2019

desserts or other food, that violates the Federal cost regulations’ general test of adequate 

documentation, and SIGTARP questions the entire bill. In 2012, the North Carolina agency 

also charged $788 in award certificate holders charged to TARP, $180 in pins, $21 in 

flowers, $500 in toys like light-up yoyos and rings, and $1,256 for 44 Lands’ End custom 

shirts in different colors and styles with a logo. This violates the general tests that costs be 

necessary, reasonable, and allocable to HHF. It also violates the tests for conferences as the 

costs were not necessary, appropriate or managed in a way to minimize the cost to the 

Federal award. 

SIGTARP also questions $5,081 in prohibited social activities costs for the 2011 conference 

that violates Federal cost regulations. This includes food charges of $3,025 during the 

networking reception, $1,761 for 66 custom Lands’ End shirts with a logo, $56 for awards 

(including a $25 Exxon gift card), and $5 for a poinsettia.70 These charges also violate the 

Federal cost regulation’s tests that the cost be necessary, reasonable, and allocable to HHF. 

There was also a charge of $234 paid to Oriental Trading Co. that was missing a receipt, 

violating the Federal cost regulation’s general test of adequate documentation. 

Additionally, SIGTARP questions $1,132 for boxed lunches plus service charges of $249 and 

tax of $105, and $25 in lunch supplies for the 2011 conference because the agenda said that 

attendees were on their own for lunch.71

After Congress authorized additional TARP dollars for HHF in 2016, the North 

Carolina agency violated Treasury’s contract and Federal regulations by charging 

TARP 100% of the costs ($13,852) to hold its 2016 annual conference with 

housing counselors

In 2014 and 2015, as TARP dollars were diminishing, the North Carolina agency did not 

charge TARP for an annual conference, only to ramp up spending in 2016. In the 2016 

appropriation law, Congress authorized additional HHF dollars. In April 2016, Treasury 

allocated an additional $224 million to North Carolina. In applying for these new TARP 

dollars in March 2016, the North Carolina agency told Treasury that it had just begun to 

wind-down HHF when new funding was announced. The North Carolina agency wrote to 

Treasury, “The BLS [Bureau of Labor Statistics] data clearly shows that NC has one of the 

largest problems with unemployment and underemployment in the nation...” The agency 

officials told Treasury in requesting these TARP dollars, “NC’s foreclosure problems 

remains more serious than the nation’s.” The North Carolina agency told Treasury, “To be a 

careful steward of HHF resources, NCHFA ensured homeowners were responsible prior to 

their hardship event and that they demonstrated a need for assistance.” 

State officials did not ensure that they were responsible in spending these new TARP 

dollars. Months later, in June 2016, the North Carolina agency began spending the money 

on itself and housing counselors, likely the first recipients in North Carolina of the new 

 70 The charges include $2,305 for “afternoon break,” including a 22% service charge of $507 and tax of $213. 71 The conference agenda noted the box lunch with North Carolina agency management was for housing 

counselor managers/directors without documenting the number of officials for whom the lunch was 

purchased.
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SIGTARP-19-001 50 March 7, 2019

funds that Congress approved. For example, in June 2016, the North Carolina agency 

charged TARP $189 for “HHF Picnic Bday Celebration expenses,” a “Bday lunch,” “Thank 

you flowers,” and a microwave for the lunch room, all of which SIGTARP questions.72

Also in June 2016, the North Carolina agency charged TARP $13,852 to host another annual 

housing counselor conference and to pay for travel for housing counselors. The conference 

was not solely on HHF. HHF was on the agenda for two hours and 45 minutes. 

Despite the fact that the conference covered non-HHF matters, the North Carolina agency 

charged TARP for 100% of the convention center costs, and breakfast and lunch for all 

attendees. This totaled $5,425. 

The North Carolina charged TARP $3,267 for gifts, awards, and balloons. For example, the 

agency charged TARP $857 for 150 “Tumbler Hot & Cold Gift Sets” given to state officials 

and housing counselors, $170 for 150 microfiber cleaning clothes with a pouch, and $100 

for tote bags. The agency charged TARP $1,854 for 44 custom Lands’ End shirts with a logo 

in different colors and styles. The agency charged TARP $273 for six “Large Curved Jade 

Crystal Prisma Awards.” The North Carolina agency also charged $5,064 for travel (hotel 

and mileage) and meals for 27 housing counselors in addition to state officials.

SIGTARP questions these costs as violating Treasury’s contract and several Federal cost regulations.

The conference costs do not conform to the limitations of the Federal award set by 

Treasury, as required by Federal regulations. 

The Federal regulations require that costs “conform to any limitations or exclusions” for 

HHF as determined by Treasury. At the start of the program in 2010, Treasury determined 

that “certain limited intake and follow-up services” provided by housing counseling 

agencies are eligible for TARP (EESA) funding, but that broader-based foreclosure 

counseling services cannot be funded. 

The conference costs were not “necessary, reasonable, appropriate or managed in a 

manner that minimized conference costs” for HHF, violating the Federal regulation 

requirement for conference costs, and the regulations’ general test that all costs be 

necessary and reasonable.73 

SIGTARP questions the full costs of the conference as violating the Federal cost regulations 

limitations on conferences. The Federal regulations limit costs for conferences to “a 

meeting, retreat, seminar, symposium, workshop or event whose primary purpose is the 

dissemination of technical information beyond the non-Federal entity and is necessary and 

reasonable for successful performance under the Federal award.” Federal cost regulations 

require conference hosts/sponsors “...to exercise discretion and judgment in ensuring that 

 72 These charges violate the Federal cost regulation’s prohibition against entertainment/social activities, and 

the requirement that costs be necessary, reasonable, and allocable to the Federal award. 73 2 CFR § 200.403. OMB Circular A-87, attachment A, C.1.a.
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SIGTARP-19-001 51 March 7, 2019

conference costs are appropriate, necessary, and managed in a manner that minimizes 

costs to the federal award.”

Because there were no changes to HHF, it was not necessary to HHF to hold an expensive 

housing counselor conference. These housing counselors were already trained in the HHF 

programs and had been working in the program. According to the North Carolina agency’s 

application to Treasury for the additional TARP dollars, the North Carolina agency “plans to 

use this funding to support three of the existing foreclosure prevention programs and the 

DPA [down payment assistance] program... These programs have proven track records, 

and no term sheet changes are necessary.

The conference costs and travel costs were also not reasonable. It was not considered 

ordinary and necessary as only one other state agency charged TARP to host an annual

housing counselor conference in 2016 with the new TARP dollars, even the state agencies 

that issued new HHF programs in 2016. It was also not reasonable because the North 

Carolina agency significantly deviated from established practice. The North Carolina agency 

did not charge TARP to host conferences after 2013. The North Carolina agency told 

Treasury in its 2016 application that after its “frequent trainings” of housing counselors, 

many of which were in person, the agency started conducting periodic webinars and 

trainings, conducting 17 webinars. The agency described this conference as a “refresher.” 

Refresher information could have taken place in a webinar just as before. In-person 

conferences were significantly more money given travel and the North Carolina agency’s 

culture of waste. 

The costs were also not reasonable because the officials did not act with prudence in the 

circumstances considering their responsibilities and the Federal government. During a 

time when the state officials were telling Treasury that the state had one of the largest 

problems with unemployment and underemployment in the nation, and that North 

Carolina’s foreclosure problems remains more serious than the nation’s, these officials 

spent thousands of TARP dollars on gifts, crystal awards, new custom shirts, and balloons.

SIGTARP found that the North Carolina agency engaged in unallowable cost-shifting 

violating the Federal cost regulation’s general test that costs must be “allocable” to the 

Federal award. 

A cost is allocable to the Federal award if the goods or services are chargeable according to 

the relative benefits received. The cost allocation requirement of the Federal cost 

regulations require an agency to split costs if they benefit more than one program. North 

Carolina officials charged 100% of the conference costs to TARP, despite the fact that the 

conference covered non-HHF matters. 

SIGTARP found that the North Carolina agency engaged in waste and abuse. 

State officials spent the new TARP dollars carelessly, extravagantly and to no purpose on 

themselves and housing counselors, rather than homeowners, which constitutes waste. 

The fact that they likely received the new TARP dollars authorized by Congress before any 

homeowner did, shows that taxpayers did not receive reasonable value for the money due 

to the inappropriate acts by state officials. Their actions were deficient and improper when 
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SIGTARP-19-001 52 March 7, 2019

compared to behavior that a prudent person would consider reasonable and necessary. 

There were state officials in the 16 other states that received the new 2016 TARP dollars 

that did not spend those dollars to host conferences.

The North Carolina agency violated Federal cost regulations by charging TARP 

$2,820 for travel and other costs for housing counselors to attend broad housing 

counselor conferences to obtain continuing education credits

The North Carolina agency charged TARP $2,820 for housing counselors to travel to and 

attend conferences on broad housing counselor issues for continuing education credits. 

• In 2012 and 2013, the North Carolina agency charged TARP $1,536 in travel costs 

for four housing counselors to attend a non-HHF “A Time to Build” conference,

74

entitled “Back to Basics” in 2012, and “Igniting the Passion” in 2013.75 The 

conference provider described the conference as to “provide housing counselors 

with a low cost, high quality way to gain continuing education credits for the 

Association of Housing Counselors.” 

• In 2012, the North Carolina agency charged TARP $1,046 for a housing counselor to 

attend a conference in Washington, D.C. The documentation stated that the 

conference was on “various foreclosure counseling procedures and time 

management for counselors along with various HUD program requirements.”

• In 2012, the North Carolina agency also charged TARP $238 for housing counselors 

to attend training on fair lending laws.

SIGTARP questions the costs as violating the Federal regulations’ requirement that the 

cost conform to any limitations or exclusions set forth in the cost principles, Federal 

laws, terms and conditions of HHF or other governing regulations as to types or 

amounts of cost items. These conference and travel costs constitute broad housing 

counselor expenses prohibited by Treasury. They were not necessary for HHF. They did 

not address Treasury’s limitations of triage and back-end counseling for HHF—the only 

areas determined by Treasury to be “necessary” for HHF. 

 74 The South Carolina agency also charged TARP for Time to Build Trainings so that housing counselors could 

earn continuing education credits. The agenda shows no sessions on HHF. SIGTARP questions these 

charges.

75 The second day of the July 2012 conference agenda was a three-hour speaker who is an author and 

podcaster who spoke on “Managing the Mind” – time management, stress management and effective 

communication, and then a lunch during a presentation by the Association of Housing Counselors and the 

North Carolina agency. The first day sessions were: a banker talking about securing a credit card to build a 

credit score, a self-titled “Social Activities-Entrepreneur” speaker on effective networking, marketing and 

management, a banker speaking on relationships and revenue, an official from the North Carolina agency 

speaking on mortgage underwriting, and a Habitat for Humanity official speaking on fundraising. The 2013 

conference agenda had sessions on student loans, financial literacy, the AG settlement, attorney 

presentations, bankers talking about successful lending partnerships and overcoming the challenges of the 

mortgage market, and the North Carolina agency officials speaking with a banker about applying for a loan.
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SIGTARP-19-001 53 March 7, 2019

Other travel and conference costs questioned due to lack of the documentation 

required by Federal regulations

The North Carolina agency charged for travel costs and/or registration fees of agency 

officials to travel to see other agency officials speak at the “Time to Build” non-HHF 

conferences in 2012 and 2013.76 These officials traveling in 2012 were the CFO and the 

manager of mortgage servicing. The officials in 2013 were an outreach official, and the 

Manager of Mortgage Servicing. SIGTARP questions $998 charged to TARP as violating the 

Federal cost regulation’s specific requirements because there was no documentation 

justifying that each’s individuals participation was necessary for HHF, as required by 

Federal cost regulations.77

The North Carolina agency charged $760 for travel and other costs for officials to the 

Women Empowerment Conference in 2013, 2014 and 2015. This conference features 

celebrities including actors and singers, television personalities, pastors and authors. 

Agency officials listed it as an HHF Outreach event. There was no substantive 

documentation. Therefore, the North Carolina agency did not meet the Federal regulation 

requirement that documentation must justify the participation of the individual is 

necessary for the Federal award.

The North Carolina agency charged TARP $14,777 to co-host a town’s Job 

Search Boot Camp, including paying the speaker fee and buying 120 copies of 

the speaker’s book on job searches

The North Carolina agency charged TARP 100% of the costs to co-host a Job Search Boot 

Camp spearheaded by the Town of Garner in February 2014 that was also co-hosted by 

another non-profit organization. SIGTARP questions these costs as violating Treasury’s

contract. The conference was not even limited to those who would have been eligible for 

the Hardest Hit Fund program, as only 69% of the 148 attendees were homeowners, and 

only about half of the attendees were unemployed. At the boot camp, there was an 

informational session about the Hardest Hit Fund and housing counselors were available to 

talk to homeowners. A press release states that counselors were also available to talk about 

credit counseling, debt consolidation, and first-time homebuyer programs, which were not 

Hardest Hit Fund programs. 

The North Carolina agency charged TARP $6,000 for the speaking fee for the job search 

expert, $1,243 to buy 120 copies of the speaker’s book, $461 for the speaker’s hotel and 

meals, $250 for a radio ad for the job search boot camp, $1,382 for lunch and lunch 

 76 Conference registration fees were charged to HHF in 2013 only. 77 The agendas for the training include non-HHF matters. The 2012 agenda sessions included credit cards and 

scores, reading a credit report, IT technology, networking, revenue, fundraising, and time management. 

The 2013 agenda was entitled “Yesterday, Today & Tomorrow: Igniting the Professional Passion.” Sessions 

included student loans, the mortgage market from a banker, tips for applying for a loan, financial literacy 

and the AG settlement.
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SIGTARP-19-001 54 March 7, 2019

supplies, $50 for balloons, and $31 for a parking sign.78 These costs violated Treasury’s 

contract and Federal cost regulations:

• Although the counselors were attending in part for triage counseling, which was 

allowed under Treasury’s contract, this could not be used to justify unrelated charges, 

such as a job search speaker and his book, a radio ad, and balloons.

79 

• The costs fail the first general test of allowability that the cost be necessary and 

reasonable to Federal awards. Conferences and job search programs are not permitted 

uses of TARP in Treasury’s contracts. Treasury had turned down state agency proposals 

to use HHF dollars for job training for homeowners. For example, a South Carolina 

senior official working on the Hardest Hit Fund told SIGTARP in a 2011 interview, 

“Before submitting our proposal we had discussions with Treasury to determine what 

would not comply with EESA requirements so we had to eliminate our job 

training/creation and legal aid activities for borrowers facing foreclosure—Treasury 

shot these down.” SIGTARP’s review revealed that charging TARP to host conferences 

was not ordinary among the 19 state agencies, and therefore was not reasonable. The 

costs also were not reasonable because the individuals did not act with prudence in the 

circumstances considering their responsibilities to the public and the Federal 

Government, in violation of Federal cost regulations.

The conference costs and speaker fees failed the second general test of allowability, that 

the cost be allocable to Federal awards, as these costs related to job searches, not triage 

counseling. 

SIGTARP is not questioning that the North Carolina agency would charge TARP a portion of 

travel for housing counselors to perform HHF triage counseling. But not 100%, as they 

were there for non-Hardest Hit Fund counseling services, including related to debt 

counseling. Treasury stated in 2010 that debt counseling could not be funded under 

EESA.80 Federal cost regulations require that the cost be allocated among HHF, credit 

counseling, debt consolidation, and the non-HHF first time homebuyer program.81 Treasury 

should determine the portion of these travel costs allocated to triage counseling for the 

Hardest Hit Fund, and seek repayment of the remainder.

SIGTARP finds that these charges also constitute waste. Taxpayers did not receive 

reasonable value to pay for a job search speaker, his book, balloons, and other items 

unrelated to HHF and official inappropriately ignored Treasury’s limitations. 

 78 North Carolina also charged TARP $5,359 for postcards, postage, and other items. 79 The conference did not “Conform to any limitations or exclusions set forth in these [cost] principles, 

Federal laws, terms and conditions of the Federal award or other governing regulations as to types or 

amounts of cost items.” 2 CFR § 200.403 (b). OMB Circular A-87, attachment A, C.1.d. 80 See Memorandum for Secretary Geithner from George Madison, September 10, 2010, made public as an 

attachment to 2010 letter to Senator Brown and 2010 letter to Representative Kilroy. 81 Implementation Guide 2-12 for OMB Circular A-87 states, “Circular A-87 requires that where a cost or 

activity benefits multiple activities or programs, those costs must be allocated in accordance with the 

relative benefits received by each activity or program. This requirement is an underlying principle of cost 

allocation.” 
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SIGTARP-19-001 55 March 7, 2019

State Agencies Charged Disproportionate Amounts of 

Travel and Conference Costs to the Hardest Hit Fund in 

Violation of Federal Cost Regulations

Federal cost regulations require that, for costs for a conference or travel that benefits the

state agency’s activity as well as the Hardest Hit Fund, the state agency allocate the costs

between TARP and its other activities. The Circular A-87 Implementation Guide provides, 

“Circular A-87 requires that where a cost or activity benefits multiple activities or 

programs, those costs must be allocated in accordance with the relative benefits receive for 

each activity or program. This requirement is an underlying principle of cost allocation.” 

Implementation guidance on OMB Circular A-87 provides, “In determining whether benefit 

is received from these common costs, consideration should be given to the following issues: 

Would the activity still exist, and thereby result in the same costs being incurred, if one 

program were terminated?” 

The Alabama agency charged TARP 100% of nearly $2,000 for two officials to 

travel to and attend a 4-day conference where they gave a one hour presentation 

on HHF and two non-HHF programs. The Alabama agency charged TARP 100% 

of $1,222 for two officials to travel to and attend another conference where they 

gave a one hour presentation on HHF and two non-HHF programs.

In June 2013, the Alabama agency charged TARP 100% of $1,956 in charges for two 

officials to travel to and attend the four-day Alabama Association of Realtors Summer 

Conference at the Perdido Beach Resort, Orange Beach, Alabama. The conference agenda 

did not discuss HHF. The agenda stated that the officials gave a presentation on a non-HHF 

program called Step-Up on homebuyer down payment assistance (DPA). At that time, 

Treasury had rejected the use of TARP funds for DPA. The powerpoint presented discusses 

DPA, a non-HHF tax credit program, and HHF. The cost allocation requirements of Federal 

cost regulations require allocating costs as the relevant benefit to the different programs. 

Two-thirds of the presentation did not benefit HHF and, therefore, TARP should not pay 

more than one-third of the cost, not 100% of the costs. Additionally, TARP should not have 

paid for more than the day of the presentation, as the remaining three days were unrelated 

to HHF, violating the Federal cost regulations’ requirement that documentation must justify 

that participation of the individual is necessary to the Federal award (here, the Hardest Hit 

Fund). The participation of the officials on three of four of the conference days was not

necessary for the Hardest Hit Fund. 

In May 2013, the Alabama agency charged TARP 100% of $1,222 in charges for these same 

two officials to travel to speak and present at a booth at the Alabama Mortgage Bankers 

Association conference. Although the agency did not include a presentation in support of 

the charge, the agenda shows that the two officials spoke about the same things as at the 

Realtors conference: the DPA program, the tax credit program, and HHF. The cost allocation 

requirements of Federal cost regulations require allocating costs as the relevant benefit to 

the different programs. Speaking and having a booth on two non-HHF programs did not 
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SIGTARP-19-001 56 March 7, 2019

benefit HHF and, therefore, TARP should not pay more than one-third of the cost. 

SIGTARP questions two-thirds of the cost, which is $807. 

The Arizona agency charged TARP 100% of the costs for an official to attend two 

conferences in New York and Washington with other Federal agencies and 

attorney general offices to discuss HHF and non-HHF programs

In 2012, the Arizona agency charged TARP $1,102, 100% of the costs for a senior official to 

travel to the Opportunity Funding Corp.’s conference in New York to meet with a Treasury 

official over HAMP, the Federal Reserve, FHFA, Fannie Mae, Freddie Mac, and two attorney 

general offices. The agenda discussed four topics: HHF, private investors financing 

foreclosure mitigation, the attorneys general settlement, and other foreclosure mitigation 

strategies. The Arizona agency should have allocated no more than 25% of the costs to 

HHF. SIGTARP questions the remaining $827 in costs not allocable to TARP. 

In 2010, the Arizona agency charged TARP $980, 100% of costs for the same senior official 

to travel to a strategic planning session for HOPE LoanPort, which, according to its website, 

developed a web portal where nonprofit credit counseling agencies, attorneys and 

homeowners could apply for a loan modification or other solution, and that became a onestop technology solution to help homeowners nationwide ensure that critical documents 

from distressed homeowners reached mortgage companies. The session documentation is 

not clear that the entire purpose was HHF. While the documentation shows that Treasury 

discussed HHF, also in attendance were Fannie Mae, Freddie Mac, servicers, mortgage 

insurers and counselor pilot partners. The official said that the travel would contribute to 

joint efforts with Hope LoanPort to promote the broad acceptance of this tool. SIGTARP 

questions this cost as having insufficient documentation to show that 100% of the cost for 

this individual’s participation was necessary for HHF as required by Federal cost 

regulations. 
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Other Travel Costs Not Supported by Documentation 

Justifying that the Traveler’s Participation Was Necessary 

for the Hardest Hit Fund, as Required by Federal 

Regulations

SIGTARP questions travel charged to TARP that violated Federal cost regulations’

requirement that travel cost “documentation must justify that: (1) participation of the 

individual is necessary to the Federal award [the Hardest Hit Fund]; and (2) the costs are 

reasonable and consistent with non-federal entity’s established travel policy.” SIGTARP 

questions $8,870 in costs as violating Federal cost regulations because there is no 

documentation justifying how the cost was necessary to HHF:

• The Illinois agency charged costs to HHF stating that it was related to HHF, but the 

documentation provides no detail. For example, $1,089 for the “Carbondale Event,” 

“Edwardsville Event,” “Peru Presentation,” “Springfield Workforce Meeting,” 

“Marion Sponsor Training,” with no discussions about what these events were, who 

attended, what was presented or discussed, or how it was necessary for HHF. One, 

the “Peru Presentation,” appears to have charged TARP for a car wash.

• $2,422 charged by the Indiana agency for the Black Expo conference in Indianapolis, 

Indiana in 2014 and 2015. The state agency only provided hotel bills and invoices 

from the City of Gary that provided no information on substance. The 2015 invoice 

from the City of Gary stated “Foreclosure Marketing Campaign.” The Indiana 

agency’s Neighborhood Christian Legal Clinic charged TARP $2,350 in 2012 to travel 

to conferences and provided no documentation to support the charges. 

• In Nevada, NAHAC charged $4,115 for a NAHAC board member and a NAHAC official 

to travel to and attend a CoreLogic conference in July 2014, staying at the St. Regis 

Resort, Dana Point, California. There was no documentation that described why the 

conference was necessary for HHF or how each individuals’ participation was 

necessary for HHF.82

• NAHAC also charged $295 in 2014 for its officials to attend various local events, 

including a luncheon of the Urban Chamber of Commerce, two Business Power 

Luncheons, a “higher education panel,” and a Women of Distinction luncheon. There 

was no substantive documentation that described the event, why it was necessary 

for HHF, or how each individuals’ participation was necessary for HHF.

 82 SIGTARP previously questioned $1,400 of these charges in its audit report, Waste and Abuse in the Hardest 

Hit Fund in Nevada, September 9, 2016. However, NAHAC did not repay these TARP funds.
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Conclusion

This is SIGTARP’s third audit finding waste and violations of Federal regulations by state 

agencies administering TARP’s $9.6 billion Hardest Hit Fund (HHF), an emergency TARP 

rescue program intended to prevent foreclosures of homeowners in states hit hard by the 

financial crisis. In 2016 and 2017, SIGTARP identified $11 million in waste and other 

misuse of TARP dollars that Treasury should recover, and in this audit SIGTARP identifies 

another $411,658 in travel and conference costs that constitutes waste or violations of 

Federal cost regulations. 

Federal dollars should only be used for the purpose Congress intended, which in the case of 

HHF is for Treasury to purchase troubled assets and to use tools to prevent foreclosures. 

The state agencies’ role under Treasury contracts is to distribute TARP dollars to 

homeowners (primarily those unemployed or underemployed), first time homebuyers, and 

to contractors, cities, and others involved in blight demolition. Treasury has allocated 

more than $1 billion in HHF for state agency administrative expenses—more than the 

TARP dollars for the blight subprogram and for the homebuyer program. Of this, around 

$200 million is still available for expenses, and all 19 state agencies are currently charging 

expenses. 

State agencies have spent at least $2 million on travel, but that number could be 

significantly higher given the lack of transparency in state agency reporting. Key examples 

of SIGTARP’s findings of waste and/or violation of Federal cost regulations for travel and 

conference costs include:

 The North Carolina charged TARP nearly $130,000 to host its annual housing 

counselor conference in 2011, 2012, 2013, and 2016, committing waste and violating 

Federal regulations. The agency charged TARP $41,626 to host its 2013 annual 

conference, including prohibited entertainment/social activity costs such as $2,500 in 

costs for a motivational speaker who spoke on “Motivation by Chocolate,” $6,309 for a 

Thank You dinner for 160 people including $120 on invitations, $500 for shuttle bus 

driver, a $100 tip for the driver, $200 in mini cupcakes, $400 in virgin cocktails, $510 

on social activities including $50 for two Bath and Body Works gift cards, $112 on 

balloons and other decorations, $41 to print pictures, $108 on award pins, $78 on a 

Viking helmet and other items from a Halloween store, $38 on decorations such as 

wreaths, cinnamon-scented pinecones, berries and candles, and $45 on Oreos. 

 In 2010, before any homeowner had received $1 from HHF, the North Carolina 

agency charged TARP $3,130 in prohibited entertainment/social activity costs for 

an evening reception that included $855 for a carved beef station with an 

additional $153 for serving by a uniformed chef, $346 on cake bites, strawberry 

shortcake martinis, and “mousse shooters of the season,” $507 on imported and

domestic cheese, and $415 on fruits and berries with a dipping sauce. 

 The North Carolina agency charged TARP $32,090 to host the annual 2011 and 

2012 Affordable Housing Conferences, which was 100% of housing counselor 
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SIGTARP-19-001 59 March 7, 2019

travel and registration fees, despite the fact that TARP was not on the agenda and 

counselors received continuing education credits, justifying it by holding a 

separate one-day conference on HHF. The agency inappropriately shifted to TARP 

100% of the counselors’ travel (driving and two nights in a hotel) so they could 

attend the non-HHF annual conference. Those same years, the agency charged 

TARP $15,537 in prohibited entertainment/social activity cost for an ice 

cream/dessert social, custom Lands’ Ends shirts, awards, flowers, and toys like 

light-up yoyos and novelty rings.83

 After Congress authorized additional Federal dollars for HHF, in 2016, the North 

Carolina agency charged to TARP 100% of the $13,852 cost of its annual 

conference, despite that the agenda included non-HHF matters. 

 The North Carolina agency charged $14,777 for the Town of Garner’s Job Search 

Boot camp in 2014, including a motivational speaker and to buy 120 copies of his 

book, at a time when Treasury had declined a request to use TARP for job searches 

at that time.

 Two top officials at the Florida agency charged TARP for conference fees and 

travel to 15 and 17 conferences each at top luxury hotels, beaches, and other 

premier destinations. Some had no Hardest Hit Fund sessions and others had only 

a 1.5-hour HHF session in a four-day conference. The Florida agency was one of 

the most underperforming state agencies in HHF and, by 2015, provided HHF to 

only 20% of applicants, the lowest of any state agency. The Florida agency 

charged TARP for its officials to travel to its monthly board meetings, an annual 

Florida housing conference, and other conferences and travel where there was no 

documentation justifying why it was necessary for TARP as required by the 

Federal regulations. For example, $558 for its CIO to travel to meet with HUD.

 Some state agency officials committed waste, and violated their state agency 

policies (thereby violating Federal regulations) by charging TARP to stay at luxury 

hotels with high rates like the W Hotel, the Sofitel, and the Mayflower when 

meeting with Treasury in Washington, D.C., while officials from other state 

agencies stayed at hotels with the GSA rate for the same Treasury meetings. For 

example, in 2014:

o The Kentucky agency charged TARP for two officials to stay at the Sofitel 

hotel for $510 and $450 per night, when the state policy required the GSA 

rate ($224). 

o The Indiana agency charged for $540 per night at the W, $499 per night at 

the Mayflower, and $476 for two officials at the Sofitel when the state 

policy was to use the lowest reasonable business travel expense possible. 

 83 For example, in three years, housing counselors and agency officials received a custom Lands’ End shirt in 

different colors and styles (ranging from 44 shirts to 66 shirts), all paid with TARP. 
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SIGTARP-19-001 60 March 7, 2019

o Two senior Ohio agency officials stayed at the W hotel paying $423 and 

$315 per night, violating the agency’s policy to use the U.S. per diem rate 

($224), while a junior Ohio official on the same trip stayed in a hotel at a 

rate of $170 per night.

o Three Arizona officials stayed at the W for $428, $388, and $315 per night 

for three nights violating the Arizona agency’s policy that requires the least 

expensive single room rate published in the conference brochure, given the 

W was not the least expensive hotel on Treasury’s list. 

 The Nevada contractor NAHAC alleged in court filings that, in 2015, it terminated 

an official in part over NAHAC’s allegation that the official charged TARP for a 

weekend stay at the Mirage Casino and Resort to see a family member perform in 

a cheerleading competition. NAHAC did not repay TARP the $543 in travel costs, 

and subsequently charged TARP $37,298 for legal fees and litigation costs to 

terminate the official and defend a wrongful termination lawsuit. 

 After the Ohio agency decided to close the HHF program to new homeowner 

applications in 2014, the Ohio agency significantly deviated from past practices by 

charging TARP more than $7,000 to hold housing counselor conferences at zoos 

that included animal presentations, zoo admissions, and for a park ranger to be on 

site. In that same timeframe, the Ohio agency charged more than $28,000 for 

travel of 13 officials to weeklong NeighborWorks training conferences that 

covered broad housing counselor topics and financial coaching, when it previously 

charged TARP for 1-3 officials to attend. 

 Officials in eleven state agencies charged TARP more than $64,000 to attend a 

four-day annual conference of a trade association held at premier destinations 

where Treasury held a 1.5 hour meeting on the first day, without documentation 

justifying why each individual’s participation was necessary as required by 

regulation. Some state agencies charged TARP for the full four days, often with 

multiple officials, with some officials even extending the trip by an extra night. The 

Florida agency charged TARP the most, followed closely by the Ohio agency. Some 

states also charged more than $48,000 to attend sessions of the association’s 

weeklong training institute and other events without documentation justifying 

why each individual’s participation was necessary as required by regulation.

 Several state agencies violated Federal regulations by charging TARP for travel 

for state officials to attend conferences, meetings or other events with other 

Federal agencies or on non-Hardest Hit Fund topics. There are many examples, 

including the following:

o The Georgia agency charged TARP $4,877 for its Deputy Executive Director 

to travel 10 times and for two other officials’ non-Hardest Hit Fund travel, 

including a 14A Bond pricing conference in New York staying at the 

Tribeca Grand Hotel. In 2017, SIGTARP reported that the Georgia agency 

mismanaged the Hardest Hit Fund, withholding funds from homeowners 
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SIGTARP-19-001 61 March 7, 2019

despite repeated warnings of overly strict criteria, unnecessary red tape, 

and a difficult and burdensome homeowner application process. 

o The California agency charged TARP $2,882 for three officials to attend a 

three-day Mortgage Bankers Association conference in Las Vegas.

o The Tennessee agency charged TARP for officials to travel and attend a 

baseball game.

o The Alabama agency charged TARP in three years for travel of two officials 

to the Mortgage Bankers Association of Alabama where they presented 

non-HHF programs.

o The South Carolina agency charged TARP for officials to travel to the 

Mortgage Bankers Association of the Carolinas conference on Hilton Head 

Island in two separate years.

 Some state agencies charged TARP disproportionate amounts (often 100%) for 

travel and conferences without allocating costs among HHF and non-HHF 

programs according to the benefits received as regulations require.

SIGTARP found that through these examples and others described in the audit, several 

state agencies treated Hardest Hit Funds as a deep pocket. SIGTARP also found that many 

state agencies did not have, or enforce, internal controls necessary to ensure compliance 

with Federal cost regulations. Federal cost regulations ensure that Federal dollars are used 

as Congress intended because they limit costs to 10 general tests for allowability (i.e., only 

those that are necessary, reasonable, allocable to the program, conform with the Federal 

agency’s limitations, and are adequately documented). Additionally, there are specific 

prohibitions against expenses such as entertainment/social activity costs, and specific 

requirements for travel and conferences. Travel expenses require documentation sufficient 

to “justify that: (1) participation of the individual is necessary to the Federal award; and (2) 

the costs are reasonable and consistent with the non-federal entity’s established travel 

policy.” The regulations state that “conference hosts must exercise discretion and judgment 

in ensuring that conference costs are appropriate, necessary, and managed in a way that 

minimizes costs to the Federal award.”

For many of the questioned travel or conference costs, SIGTARP found multiple violations 

of Federal cost regulations. These included that SIGTARP found that the state agency did 

not have the documentation required by the Federal cost regulations to justify that the 

participation of the individual was necessary for HHF. A single word “HHF,” a statement 

that there was a “HHF meeting,” a statement that travel was to meet with a named group 

with no further discussion or a conference agenda that did not discuss HHF and was 

unclear why it was necessary for HHF is not sufficient documentation. In other instances, 

the state agencies violated their own travel policies or significantly deviated from past 

practices (factors cutting against reasonableness, as articulated in the regulations). 

SIGTARP found other costs that did not meet other specific requirements for travel and 

conferences set out in the Federal cost regulations, or were prohibited social activity costs.
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SIGTARP found that although Treasury designed the program in 2010 to curb misuse of 

TARP dollars, subsequently, Treasury lacked effective oversight in nine areas. For example, 

even though Treasury conducted more than 100 reviews of state agency expenses, 

Treasury did not enforce Federal cost regulations. For example, Treasury did not analyze 

whether an expense was necessary or reasonable using the factors in the regulations. 

Treasury did not enforce the regulations’ requirement that a cost not exceed Treasury’s 

own limitations, such as Treasury’s strict 2010 limits on costs related to housing 

counselors. Treasury determined in 2010 that it could only allow TARP for HHF triage and 

back end counseling, and told state agencies that TARP funds could not be used to pay for 

any other counseling (for example, broad foreclosure prevention or debt relief). SIGTARP 

found instances where state agencies violated this limitation—for example for annual 

housing counselor conferences or broad foreclosure prevention training conferences 

where counselors obtained continuing education credits. Additionally, Treasury did not 

enforce the Federal cost regulations’ specific requirement for travel or for conferences or 

prohibition on social activity costs. 

Since SIGTARP began publishing these audits finding waste, Treasury has made some 

improvement in its oversight, but should do more to increase its effectiveness. As SIGTARP 

has been conducting and publishing these audits, certain state agencies have repaid some 

of the questioned costs, and SIGTARP’s audits have deterred some future waste. After 

SIGTARP asked questions about certain travel, another state repaid the cost before this 

audit was published. These recoveries highlight the benefit of effective oversight. 

Treasury has allowed state agencies to keep more than $10 million of the $11 million 

identified by SIGTARP as waste and/or violating Federal regulations, leaving taxpayers and 

the intended recipients of TARP dollars under this program to shoulder the burden of 

dollars lost to misuse. Treasury’s application of the Federal cost regulations is not 

consistent with OMB’s Circular A-87 Implementation Guidance for those regulations. For 

example, Treasury did not recover a $20,000 severance payment to the Nevada contractor 

CEO who NAHAC’s board forced to resign, on the alleged basis that the Federal cost 

regulations allow for severance payments. However, those regulations only allow 

severance payments for normal turnover, not forced resignation. Abnormal turnover 

requires approval by Treasury. Treasury did not recover the $20,000 despite it violating 

the Federal regulations. Treasury allowed other expenses that fell into specific categories 

articulated in the regulations without determining whether the cost passed the regulation’s 

10 general tests of allowability, such as that expenses are necessary and reasonable. For 

example, although the regulations allow limited occasions for food costs, the regulations do 

not allow a steak and seafood lunches, or catered barbeques for 60 or 90 people with décor 

and other charges. These were not necessary or reasonable expenses. 

There is no better way to deter the misuse of TARP dollars than for Treasury to require 

repayment of TARP dollars misused in the past. When Treasury analyzes SIGTARP’s 

recommendations in this audit, it should revisit SIGTARP’s 2016 and 2017 

recommendations for the remaining $10 million, after reviewing the A-87 Implementation 

Guide and with further analysis of the Federal regulations, with the mindset of limiting 

Federal dollars to what Congress intended in TARP. In addition, Treasury should analyze 
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GAO’s definitions of waste and abuse. TARP dollars returned can be recycled back into 

the program or repaid to the Federal Government.

It is critical that Treasury ensure that state agencies spend the remaining approximate 

$200 million available for administrative expenses only to achieve the purpose Congress 

intended. Treasury should improve its oversight, by enforcing the Federal cost regulations 

and recovering past costs that constitute waste, abuse, or violations of the Federal 

regulations. The stakes are high. Every dollar wasted or squandered is one less dollar for 

homeowners or taxpayers. 
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Recommendations

1. In order to meet Treasury’s strategic goals of winding down sun setting programs 

responsibly and funding the Government at the least cost, Treasury should in the 

Hardest Hit Fund: (1) issue guidance on applicable Federal cost regulations to state 

housing finance agencies; (2) include all travel costs in the “Travel” category of its 

budget and require state agencies to report all travel in the “Travel” category of its 

Quarterly Financial Reporting; (3) enforce all applicable provisions of the Federal 

cost regulations to state agency administrative expenses, including, for example, the 

10 basic guidelines/general tests (that costs are necessary, reasonable and allocable 

to the Federal award etc.) as well as regulations that apply to travel, conferences, 

and social activities; (4) report publicly on the amount of TARP dollars spent on 

travel and conferences, make public each state agency’s Quarterly Financial Reports 

in the Hardest Hit Fund, and ensure that each state agency files its report timely.

2. In order to fulfill its strategic goals to wind down sun setting programs responsibly 

and to fund the Government at the least cost, and to prevent waste, abuse, and 

violations of Federal cost regulations, Treasury should: (1) no longer hold in-person 

Hardest Hit Fund summits or conferences with state agencies, or hold a session at 

the National Council of State Housing Agencies (NCSHA) annual conference, but 

instead hold teleconferences; (2) should recover $17,008 in TARP dollars spent in 

violation of the Federal cost regulations for luxury hotels at high rates to the HHF 

Summit; (3) should not allow state agencies in the Hardest Hit Fund to charge TARP 

for travel or registration fees for the annual NCSHA trade association conference, or 

any other NCSHA conference, training, or event; and (4) should recover $113,355, 

representing the TARP dollars spent in violation of the Federal cost regulations 

and/or constituting waste in the Hardest Hit Fund for NCSHA conferences and 

events, including extra nights from state agencies.

3. In order to fulfill Treasury’s strategic goals of winding down sun setting programs 

responsibly and to fund the Government at the least cost, and to prevent waste, 

abuse, and violations of Federal cost regulations, Treasury should require preapproval by Treasury for all costs of a state agency in the Hardest Hit Fund to host a 

conference.

4. In order to fulfill Treasury’s strategic goals of winding down sun setting programs 

responsibly and to fund the Government at the least cost, and to prevent waste, 

abuse, and violations of Federal cost regulations, Treasury should assess the 

internal controls of all 19 state housing finance agencies in the Hardest Hit Fund for 

controls to ensure compliance with all applicable Federal cost regulations.

5. In order to fulfill Treasury’s strategic goals of winding down sun setting programs 

responsibly and to fund the Government at the least cost, Treasury should recover 

TARP dollars spent in violation of the Federal cost regulations and/or constituting 

waste in the Hardest Hit Fund by the National Affordable Housing Assistance 

Corporation (NAHAC) consisting of: (1) $543 for an official’s travel to the Mirage 

Casino where a family member performed in a cheerleading competition, $1,884 for 
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travel for the depositions, and $22,569 in legal expenses, and $12,845 for a private 

investigator, computer forensics expert, and lawyer; (2) $4,115 for travel to the 

CoreLogic conference at the St. Regis Monarch Beach Resort, California; and (3) 

$295 for the Urban Chamber of Commerce luncheon, Business Power Luncheons, a 

“higher education panel,” and a Women of Distinction luncheon.

6. In order to fulfill Treasury’s strategic goals of winding down sun setting programs 

responsibly and to fund the Government at the least cost, Treasury should recover 

TARP dollars spent in violation of the Federal cost regulations and/or constituting 

waste in the Hardest Hit Fund by the Florida agency consisting of: (1) $7,028 in 

travel and registration fees for the 11 and 5 conferences other than the NCSHA 

conferences traveled to and attended by two top officials while the Florida agency 

was one of the worst underperforming agencies in the program in admitting 

homeowners; and (2) $16,060 in travel related to the Florida agency’s board 

meetings, annual Florida Housing Coalition conferences, for a communications 

specialist’ travel lacking documentation, the National Foundation for Debt 

Management training, for the CIO to travel to Atlanta to meet with HUD, the 

Association of Government Accountants conference, and “realtor training;” 

7. In order to fulfill Treasury’s strategic goals of winding down sun setting programs 

responsibly and to fund the Government at the least cost, Treasury should recover 

TARP dollars spent in violation of the Federal cost regulations and/or constituting 

waste in the Hardest Hit Fund by the North Carolina agency consisting of: (1) 

$101,869 of the $112,324 in conference and travel costs related to annual housing 

counselor conferences and other travel that have not yet been repaid to Treasury, 

including costs for a Thank You dinner, a carving station reception with a uniformed 

chef and other social events such as costs associated with the Motivation by 

Chocolate motivational speaker (costs not previously included in a SIGTARP 

recommendation); and (2) $14,777 to co-host the Town of garner’s Job Search Boot 

camp, including paying a professional speaker and 120 copies of his book; 

8. In order to fulfill Treasury’s strategic goals of winding down sun setting programs 

responsibly and to fund the Government at the least cost, Treasury should recover 

TARP dollars spent in violation of the Federal cost regulations and/or constituting 

waste in the Hardest Hit Fund by the Ohio agency, including: (1) $7,229 related to 

conferences at zoos just before the program announcement to close the program to 

homeowner applicants (including costs previously questioned by SIGTARP but that 

have not yet been repaid); and (2) $28,684 in NeighborWorks training conferences, 

including conferences after the program closing announcement. 

9. Treasury should review and analyze the Federal cost regulations to identify charges 

to TARP by other state agencies associated with NeighborWorks training 

conferences and recover unallowable charges. 

10. In order to fulfill Treasury’s strategic goals of winding down sun setting programs 

responsibly and to fund the Government at the least cost, Treasury should recover 

TARP dollars spent in violation of the Federal cost regulations and/or constituting 

waste in the Hardest Hit Fund by the Georgia agency consisting of $4,877 for non-
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HHF travel including for example a Bond pricing conference in New York, Melville 

meeting on tenant selection policies in Washington, D.C., a low income housing tax 

credit conference in Florida, and an American Bar Association event in Washington, 

D.C.

11. In order to fulfill Treasury’s strategic goals of winding down sun setting programs 

responsibly and to fund the Government at the least cost, Treasury should recover 

TARP dollars spent in violation of the Federal cost regulations and/or constituting 

waste in the Hardest Hit Fund by the Indiana agency consisting of: (1) $2,383 for 

travel including for a HUD meeting in Chicago, a Federal Reserve conference in New 

York, and travel to a job fair; and (2) $4,772 in travels and conference costs lacking 

documentation required by Federal regulation justifying that participation was 

necessary for the Hardest Hit Fund.

12. In order to fulfill Treasury’s strategic goals of winding down sun setting programs 

responsibly and to fund the Government at the least cost, Treasury should recover 

TARP dollars spent in violation of the Federal cost regulations and/or constituting 

waste in the Hardest Hit Fund by the California agency consisting of $11,155 for 

travel including for a Federal Reserve conference in New York, a Mortgage Bankers 

Association conference in Las Vegas, the CoreLogic Risk Summit conference at the 

St. Regis Monarch Beach Resort, and the CA Credit Union League Conference in Las 

Vegas.

13. In order to fulfill Treasury’s strategic goals of winding down sun setting programs 

responsibly and to fund the Government at the least cost, Treasury should recover 

TARP dollars spent in violation of the Federal cost regulations and/or constituting 

waste in the Hardest Hit Fund by the Tennessee agency consisting of $3,449 for 

travel including for a baseball game, a Leadership Academy, the Chattanooga 

Summit, an “executive management function,” a ribbon cutting ceremony, a 

Southeastern Directors conference, meetings with Veterans Affairs and Goodyear 

employees, and Workplace Environment training.

14. In order to fulfill Treasury’s strategic goals of winding down sun setting programs 

responsibly and to fund the Government at the least cost, Treasury should recover 

TARP dollars spent in violation of the Federal cost regulations and/or constituting 

waste in the Hardest Hit Fund by the Kentucky agency consisting of $2,812 for 

travel and other costs at the Kentucky Society for Human Resources Management 

annual conference and the Kentucky Sheriff’s conference.

15. In order to fulfill Treasury’s strategic goals of winding down sun setting programs 

responsibly and to fund the Government at the least cost, Treasury should recover 

TARP dollars spent in violation of the Federal cost regulations and/or constituting 

waste in the Hardest Hit Fund by the Arizona agency consisting of: (1) $1,628 for 

travel and other costs for the Home Preservation Exchange conference in 

Washington, D.C., the Annual Mortgage Servicing conference in Dallas, the 

Governor’s Housing Forum, its own housing forum, and a job fair; (2) $827 of the 

$1,102 in travel costs for the Opportunity Funding Corp. conference in New York to 

meet with Treasury to discuss HAMP, and meet with the Federal Reserve, FHFA, 
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Fannie Mae, Freddie Mac, and two Attorney general offices to discuss, which were 

disproportionately charged to the Hardest Hit Fund; and (3) 100% of the $980 in 

the travel costs for the strategic planning session for HOPE LoanPort , which were 

disproportionately charged to the Hardest Hit Fund. Treasury should review and 

analyze the Federal cost regulations to identify the disproportionate charges.

16. In order to fulfill Treasury’s strategic goals of winding down sun setting programs 

responsibly and to fund the Government at the least cost, Treasury should recover 

TARP dollars spent in violation of the Federal cost regulations and/or constituting 

waste in the Hardest Hit Fund by the Alabama agency consisting of: (1) $5,488 for 

travel and other costs for the Mortgage Bankers Association conference, including 

$807 of the presentation was unrelated to HHF but that were charged to HHF; and 

(2) $1,304 of the $1,956 charged to TARP for travel to the Alabama Association of 

Realtors Summer Conference. 

17. In order to fulfill Treasury’s strategic goals of winding down sun setting programs 

responsibly and to fund the Government at the least cost, Treasury should recover 

TARP dollars spent in violation of the Federal cost regulations and/or constituting 

waste in the Hardest Hit Fund by the South Carolina agency consisting of $5,392 for 

travel to the Board of Commissioners Meeting and Annual Retreat, the Mortgage 

Bankers Association conference on Hilton Head Island, the Government Finance 

Officers Conference, and state supervisory practice training.

18. In order to fulfill Treasury’s strategic goals of winding down sun setting programs 

responsibly and to fund the Government at the least cost, Treasury should recover 

TARP dollars spent in violation of the Federal cost regulations and/or constituting 

waste in the Hardest Hit Fund by the Illinois agency consisting of: (1) $1,675 for the 

Annual Hispanics Employees Training Conference, the Municipal League 

Conference, and the Housing Action Conference; (2) $1,089 in travels costs lacking 

documentation required by Federal regulation justifying that participation was 

necessary for the Hardest Hit Fund.
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Management Comments and SIGTARP’s Response

Treasury responded that it will no longer host the annual Hardest Hit Fund summits or 

hold HHF discussions at trade group conferences. Treasury also stated that it will review 

and evaluate SIGTARP’s other recommendations. Treasury agreed that, it would “take 

remedial actions as appropriate, including the recovery of any taxpayer funds” in response 

to expenses that violate program requirements. Treasury also provided technical 

comments to the draft report, which SIGTARP addressed where applicable.
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Appendix A – Objective, Scope, and Methodology

SIGTARP performed this audit under the authority of the Emergency Economic 

Stabilization Act of 2008, which also incorporates certain duties and responsibilities of 

inspectors general under the Inspector General Act of 1978, as amended. This is SIGTARP’s 

third audit finding waste and violations of Federal regulations by state agencies 

administering TARP’s $9.6 billion Hardest Hit Fund (HHF). 

After identifying $8.2 million in wasteful spending by a Nevada contractor in the Hardest 

Hit Fund, Senator Charles Grassley asked SIGTARP to audit spending on administrative 

expense in the program.84 SIGTARP’s second audit resulted in a report, dated August 25, 

2017, finding nearly $3 million wasted or unnecessary spending of TARP dollars by state 

agencies participating in the Hardest Hit Fund in certain expense categories.85 SIGTARP 

continued its review of administrative expenses spent by the Hardest Hit Fund state 

agencies. 86

This audit focused on travel, conferences, and other TARP charges by the housing finance 

agencies (and/or their contractors or partners) in 18 states and the District of Columbia 

participating in the Hardest Hit Fund program (“19 state agencies”) who receive Hardest 

Hit Fund dollars. The scope of this audit generally covered travel and conference expenses 

charged to TARP in the Hardest Hit Fund since the program’s inception in 2010 through 

October 31, 2018. 

To meet the audit objective, SIGTARP applied OMB Circular A-87 and 2 CFR Part 200, 

Subpart E, uniform administrative requirements and cost principles to identify questioned 

costs or costs constituting waste or abuse, as defined by GAO standards. A questioned cost 

means a cost that is questioned because of an audit finding: (a) Which resulted from a 

violation or possible violation of a statute, regulation, or the terms and conditions of a 

Federal award, including for funds used to match Federal funds; (b) Where the costs, at the 

time of the audit, are not supported by adequate documentation; or (c) Where the costs 

incurred appear unreasonable and do not reflect the actions a prudent person would take 

in the circumstances.

As part of its analysis of administrative expenditures, SIGTARP examined whether travel 

and conference charges violated Treasury’s contract or applicable Federal cost regulations. 

In that determination, SIGTARP considered: (1) criteria articulated by Treasury; (2) 

Treasury’s list of “permitted expenses” in its HHF contracts with state agencies; (3) 

Treasury’s and state agencies’ reporting on their spending and performance in modifying 

loans; and (4) state agency policies. 

SIGTARP obtained, reviewed, and analyzed data and documentation from the 19 state 

agencies, as it pertains to any employee in contract or partnership with the state agency 

related to the Hardest Hit Fund, to include travel authorizations and reimbursement claims, 

 84 See SIGTARP Audit Report, Waste and Abuse in the Hardest Hit Fund in Nevada, September 9, 2016.

85 See SIGTARP Audit Report, Unnecessary Expenses Charged to the Hardest Hit Fund, August 25, 2017. 86 Senator Grassley had been the Chairman of the Senate Judiciary Committee. As of January 2019, Senator 

Grassley became the Chairman of the Senate Committee on Finance.
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invoices and receipts, conference materials, expense reports for agency hostedconferences, credit card statements, agencies’ certified survey responses on HHF 

administrative expenses, certain administrative contracts or agreements, quarterly 

financial reports submitted to Treasury, Treasury’s compliance reviews, and other relevant 

correspondence and memoranda. SIGTARP also obtained, reviewed, and analyzed 

documentation from Treasury as it pertains to its annual Hardest Hit Fund Summits. 

SIGTARP also, as appropriate, conducted telephonic interviews with state agency officials. 

SIGTARP conducted this performance audit from October 2017 through February 2019 in 

Washington, D.C. The audit was conducted in accordance with generally accepted 

government auditing standards established by the U.S. Government Accountability Office. 

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 generally relied on Treasury and state agencies to provide complete and relevant 

supporting documentation. Several states took over 2 months to provide the 

documentation SIGTARP requested. To the extent that the documentation provided to 

SIGTARP by these entities did not reflect a comprehensive response to SIGTARP’s requests

or questions, SIGTARP’s review may have been limited.

Use of Computer-Processed Data

To perform this audit, SIGTARP relied on general ledger data provided by state agencies, 

and on quarterly performance and financial data provided by those agencies and by 

Treasury. SIGTARP did not validate the accuracy of the data. 

Internal Controls

To address the reporting objective in this audit, SIGTARP performed a limited review of 

internal controls by interviewing state agency officials and reviewing Treasury compliance 

reports and state agency policies and procedures.

Prior Coverage

SIGTARP has covered the HHF program in nine previous reports:

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

Implementation of the Hardest Hit Fund Program.” 
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• 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.”

• On January 11, 2017, SIGTARP released an evaluation report titled, “Improving 

TARP’s Investment in American Workers.”

• On August 25, 2017, SIGTARP released an audit report titled, “Unnecessary 

Expenses Charged to the Hardest Hit Fund.” 

• On October 13, 2017, SIGTARP released an audit report titled, “Mismanagement 

of the Hardest Hit Fund in Georgia.”

• On March 8, 2018, SIGTARP released an interim audit report titled, “The Hardest 

Hit Fund Lacks Standard Federal Requirements for Competition.”

SIGTARP also issued an alert letter on 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 – Management Comments
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SIGTARP Hotline

If you are aware of criminal activity, fraud, waste, or abuse associated with the Troubled Asset Relief 

Program, please contact SIGTARP.

By Online Form: www.SIGTARP.gov/hotline 

By Phone: Call toll free: (877) SIG-2009

By Mail: Office of the Special Inspector General

for the Troubled Asset Relief Program

1801 L Street., NW, 4th Floor

Washington, DC 20220

Press Inquiries

If you have any inquiries, please contact our Press Office: 202-927-8940

Legislative Affairs

For Congressional inquiries, please contact our Legislative Affairs Office: 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.