When it started six years ago, the $7.6 billion federal Hardest Hit Fund was intended to help people save their homes.
Now, at least in Hillsborough County, it has morphed into a program that helps people buy homes.
Since January, only 123 struggling Hillsborough homeowners have qualified for Hardest Hit help in paying their mortgages, a Tampa Bay Times analysis found. In the same period, nearly eight times as many people — 935 — have received up to $15,000 for down payments and closing costs to buy homes, including new townhouses.
"I'm surprised to hear the ratio is that high,'' said Ernest Coney, president of CDC of Tampa. Although the recession is over, he said his nonprofit housing counseling agency still sees "hundreds'' of homeowners every year hoping for Hardest Hit help to avoid foreclosure even as more and more of the federal money goes to home buyers.
Hillsborough is one of just five Florida counties — and the only one in Tampa Bay — initially authorized to use Hardest Hit money for down payments and closing costs. The explosive growth of the down payment programs is drawing scrutiny from the federal official who monitors the Hardest Hit Fund nationally.
"The thing I really struggle with is that these homeowner-assistance programs are really hard to get into, but it doesn't seem that hard to get into the home buyer programs — that's the issue,'' said Christy Goldsmith Romero, special inspector general for the Troubled Asset Relief Program.
In the three months ended in June, a total of 1,450 buyers were approved for Hardest Hit down payment help in Hillsborough, Duval, Orange, Brevard and Volusia counties. Just one applicant was rejected. At the same time, only 762 homeowners in the entire state began receiving Hardest Hit mortgage relief while 445 were turned down.
"The Hardest Hit Fund is sort of morphing from the traditional idea of trying to keep people in their homes to doing other things like helping people buy homes,'' Goldsmith Romero said in a phone interview with the Times. "While we can see some benefit to that, it doesn't allow the program to fulfill its purpose to help the people it was designed to help.''
With millions of Americans facing foreclosure, the U.S. Treasury Department created the Hardest Hit Fund in 2010 to bolster Florida and 17 other states slammed by the housing bust.
Florida's $1 billion share is administered by the state-run Florida Housing Finance Corp. It initially used the money to make mortgage payments so homeowners who had lost their jobs could avoid foreclosure.
In recent years, the agency has also spent Hardest Hit money to reduce loan balances for underwater homeowners and pay taxes and insurance for seniors with reverse mortgages.
Florida, though, has consistently lagged other places in getting out the aid. In a scathing report last year, Goldsmith Romero blasted the state for having one of the highest rejection rates, one of the lowest acceptance rates and one of the longest waiting times for Hardest Hit assistance.
"If you want to let more home buyers in, you need to do a better job in distributing these funds to homeowners,'' she said.
Yet in July 2015, with thousands of Florida owners still waiting to get Hardest Hit help, the state agency launched the down payment program for first-time buyers in Hillsborough and the other four counties. The idea was that helping people buy homes would stabilize neighborhoods in those counties — chosen, the agency said, because they had high rates of foreclosures, short sales, negative equity and seriously delinquent mortgages.
Goldsmith Romero, though, said her own analysis raises questions about whether the $108.4 million that Florida has earmarked for down payment aid is being spent in the worst-off areas.
"You have this situation in Hillsborough where a third of the neighborhoods that are getting Hardest Hit Fund down payment assistance are actually in ZIP codes that are doing better than others in terms of foreclosures and mortgage delinquencies,'' she said.
While the down payment aid has gone to buyers in areas like Ruskin that were ravaged by the foreclosure crisis, it has also helped people buy homes in more stable, sought-after areas like Westchase, New Tampa, Carrollwood and even South Tampa.
Moreover, those getting the assistance aren't necessarily first-time buyers or the neediest.
They can have owned homes before, just not within the past three years. They can make as much as 140 percent of Florida's $28,236 median income, or up to $39,530. And they don't have to buy modest, run-down houses — at least four buyers contracted for newly built townhomes, the Times found.
The bottom line: While the Hardest Hit Fund has helped more than 900 people buy houses this year in Hillsborough, it has helped just nine elderly homeowners pay their property taxes and insurance. It has helped only 30 Hillsborough homeowners who are substantially underwater on their mortgages.
The number "of folks coming in for foreclosure assistance has remained somewhat level over the past three to four years, but people are still looking for services with principal reduction,'' said Coney, whose CDC of Tampa helps applicants for Hardest Hit assistance. "And of course a lot of folks are still somewhat underemployed'' and have a hard time making their mortgage payments.
Coney has found that while there is "a high denial rate'' for homeowners seeking Hardest Hit mortgage help, the down payment program is comparatively easy to get into — much easier than for similar programs run by Hillsborough County and the city of Tampa.
"It's not as restrictive on the areas (where people can buy),'' he said, "and part of the reason the Hardest Hit Fund is so successful is that they have more funding.''
State housing officials say they aren't surprised by the popularity of the down payment program. In fact, after saying it would be limited to only to five counties including Hillsborough, they quietly expanded it Sept. 1 to Pinellas, Pasco, Polk, Osceola, Clay and St. Lucie.
In general, Coney considers down payment assistance worthwhile. "As a comprehensive community developer, I believe in the opportunity to create home ownership,'' he said. "You're removing blight and creating (stable) neighborhoods.''
But some experts say it can be dangerous for people to have so little equity in their homes. Those who bought during the boom with little or nothing down were especially affected by the housing bust — and many of them later sought Hardest Hit help. Buyers today could also find themselves in trouble if housing values fall again, notes Edward Pinto, co-director of the International Center of Housing Risk at the American Enterprise Institute.
"If you do come under stress,'' he said, "you're likely to be in a world of hurt.''
Contact Susan Taylor Martin at firstname.lastname@example.org or (727) 893-8642. Follow @susanskate.