Florida Among 19 States Caught Wasting $Millions from TARP Funds Meant for Distressed Homeowners
Florida Housing Finance Corporation wrongly spent money on executive bonuses, a lavish dinner, and an expensive barbecue; all money intended to be used to facilitate loan modifications.
PALM COAST, FL – August 29, 2017 – The Special Inspector General for the Troubled Asset Relief Program (SIGTARP) issued on Friday a scathing report rebuking the practices of 19 states, including Florida, for misappropriation of federal Troubled Asset Relief Program (TARP) funds intended to for use by state housing agencies to assist homeowners refinance their troubled mortgages.
Florida, along with Alabama, Arizona, California, Washington, D.C., Georgia, Illinois, Indiana, Kentucky, Michigan, Mississippi, North Carolina, New Jersey, Nevada, Ohio, Oregon, Rhode Island, South Carolina, and Tennessee were allotted additional HARP funds from a Hardest Hit Fund (HHF) created in 2010 and designed to help state's housing finance agencies assist struggling homeowners and help stabilize neighborhoods.
The text below is quoted from the SIGTARP’s report – emphasis added.
Unnecessary Expenses Charged to the Hardest Hit Fund – OFFICE OF THE SPECIAL INSPECTOR GENERAL FOR THE TROUBLED ASSET RELIEF PROGRAM
The Florida Housing Finance Corporation, Whose Executive Director Was Forced to Resign in December 2016 Over Bonuses Paid For with State Dollars and a Lavish Dinner, Also Charged TARP for a TARP Barbeque and $106,774 for Bonuses Including Doubling and Tripling Bonuses After SIGTARP’s Audit
SIGTARP questions $106,774 in bonuses by the Florida Housing Finance Corporation charged to TARP, as well as $636 in gift certificates to employees and $454 in a TARP barbeque, an all-employee lunch, and a lunch with Bank of America. These expenses violate Treasury’s contract because they are not necessary to modify loans. Other state agencies modified loans without paying bonuses or having TARP barbeques. Additionally, these are not listed in Treasury’s “Permitted Expenses” in its contracts. These expenses also constitute waste. Paying bonuses when a state agency is severely underperforming in HHF constitute waste.
Florida agency officials told SIGTARP that the Executive Director of the Florida agency authorized all of the bonuses charged to TARP. This same Executive Director was reportedly asked to resign by the Governor around December 23, 2016, after the Florida Inspector General found that state funds had paid nearly $443,000 in employee bonuses and a $52,000 dinner, while thousands of Floridians were waiting for assistance to save their homes. The Governor’s spokesperson reportedly told the Miami Herald that the Governor asked the Executive Director to resign, saying, “Whenever any tax dollars aren’t used effectively and transparently, the governor is obviously concerned.”
In October 2015, SIGTARP issued a report finding that the Florida Housing Finance Corporation had severely underperformed in the Hardest Hit Fund. SIGTARP reported that only 20% of homeowners who applied to modify their loan received assistance, the lowest of any HHF state, and that the Florida state agency consistently denied a higher percentage of homeowners for assistance than the national average.
- The Florida state agency charged TARP for a $15,000 signing bonus to a contractor in 2011.
- The Florida state agency charged TARP for bonuses for 15 employees.
- The Florida state agency charged TARP for an annual bonus to the Director in charge of HHF despite consistent underperformance in HHF.
- The director’s bonus charged to TARP nearly doubled in 2015 and 2016, despite SIGTARP’s October 2015 report showing that the Florida agency had provided HHF to homeowners at the lowest rate of any state agency in HHF, and the fact that, during those years, the number of Florida homeowners provided HHF dropped significantly from 2014.
- SIGTARP found that the amount of bonuses the state agency charged to TARP doubled and tripled to other senior Florida officials after SIGTARP’s October 2015 audit report on the severe underperformance of the Florida agency.
- Also in December 2015, the Florida agency paid one employee $7,424—the highest bonus charged to TARP other than the Director and contractor signing bonus.
- In December 2016, despite no substantial improvement after SIGTARP’s report, the Florida agency paid cash bonuses to HHF staff, in addition to the director’s bonus.
The Florida state agency also charged TARP $636 for six $100 gift cards given to employees to the Publix grocery store.
The bonuses and gifts were not necessary to modify loans. Other state agencies modified loans without paying bonuses and buying gifts. Bonuses are not listed as “Permitted Expenses” in Treasury’s contract.
Given the severe underperformance of the Florida agency, these bonuses and gifts also constitute waste and abuse. At the same time the Florida agency was charging TARP for these bonuses and gifts to employees, it was denying TARP dollars to homeowners at high rates. SIGTARP previously reported that in the first 2 years of the program (2010-2012), nearly half of all homeowners were denied as ineligible. In November 2012, Treasury sent a memorandum to the Florida agency that at current participation and spending rates, Treasury estimated that Treasury will not utilize a significant amount of allocated funds, and that Florida Housing lags behind other HHF states.
This is waste and abuse when the agency was severely underperforming in modifying homeowner loans in HHF.
TARP Barbecue and Sandwiches
SIGTARP also questions the Florida agency’s charge of $454 for a TARP barbeque, lunch for all employees, and lunch with Bank of America employees as not necessary to modify loans. This is made clear because meals are not permitted expenses in Treasury’s contract, and other state agencies modified loans without a TARP barbeque, employee meals, or meals with banks. In September 2011, the Florida agency charged TARP $231 for a catered TARP barbeque from Piggy’s Barbeque for all of its employees, before Treasury visited for a compliance review. This review would result in Treasury sending an Action Memorandum to the Florida agency about its underperformance in the program. In September 2013, the Florida agency charged TARP $89 for lunch for all employees as they worked on rolling out a new HHF program. The Florida agency charged TARP $134 for lunch for a meeting with Bank of America.
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