The Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) audited its target program and found that the “Hardest Hit Fund” established under TARP is failing to act as intended. Although that fund is supposed to serve as a “safety net” for unemployed and underemployed Americans, more than 80 percent of the individuals who applied for and were denied assistance though the program earn less than $30,000 a year. In a full dozen of the 19 states eligible for hardest-hit money, three of every four homeowners denied made less than $30,000 a year.

Christy Romero, TARP’s special inspector general, said the findings indicate the program needs to do more to open up funding to low-income workers, and mentioned “cities where General Motors (GM) or its suppliers laid off workers” in particular. According to the audit, denial rates were highest in Michigan and Ohio. Denial rates for under-$30,000 earners were 91 percent in Dayton, Ohio; 89 percent in Cleveland, Ohio; and 85 percent in Flint, Michigan. Saginaw and Detroit also had high denial rates of 83 and 82 percent, respectively. SIGTARP said it was unable to determine the cause of the high denial rates because “many necessary state agency records were missing or incomplete, [and] many agencies were also unable to provide specific reasons for denials.”

One reason that Michigan in particular may have such high denial rates is that workers cannot receive hardest-hit funds and unemployment benefits, nor are they eligible if their pay was cut more than a year prior to their application. SIGTARP noted that most states do not have this restriction and that as a result, Michigan workers are not playing on a “level field.” The audit report added, “The new normal of unemployment [is that] it often lasts a long time.”

The authors of the report also speculated that the program is simply ineffective at reaching the truly “hardest hit” homeowners in a timely fashion, and scolded program administrators.

“Congress required that these TARP funds be used to bail out American workers, not just to bail out companies like General Motors,” they wrote, pointing out, “Despite returning to profitability, GM and other auto companies closed plants and laid off workers even in the last year.” This trend of layoffs could change in the near future as newly inaugurated president Trump pushes American automakers to build more cars in the United States rather than investing in manufacturing and assembly in Mexico.

At present, the hardest-hit fund within TARP still contains billions of dollars, Romero noted, adding that making it easier for low-income-earners to access these funds before they fall behind on their mortgages and possibly lose their homes will be good for both the homeowners and their communities. Mark McArdle, deputy assistant secretary for the Office of Financial Stability with the U.S. Treasury, countered SIGTARP’s negative tone by commenting, “Approximately 80 percent of homeowners approved for hardest-hit-funds programs have received assistance [and]…more than 80 percent of homeowners who have received assistance have an income of less than $50,000 per year.”

You can get more of Carole VanSickle Ellis’ coverage of this and other real estate topics and events here.

About the Author


Carole VanSickle Ellis is the host of Real Estate Investing Today, a daily nine-minute investing podcast, and the editor of the Bryan Ellis Investing Letter. Contact her at or visit

  • Carole VanSickle Ellis

    Carole VanSickle Ellis serves as the news editor and COO of Self-Directed Investor (SDI) Society, a membership organization dedicated to the needs of self-directed investors interested in alternative investment vehicles, including real estate. Learn more at or reach Carole directly by emailing

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