Inspector general: Foreclosure aid program flawed

[April 12, 2012]  WASHINGTON (AP) -- A government watchdog says the Treasury Department fumbled a program aimed at staving off foreclosure for people who are unemployed or owe more than their homes are worth.

The special inspector general for the financial bailouts says in a report Thursday that homeowners have received only 3 percent of the money set aside for Treasury's Hardest Hit Fund.

Money from the fund is distributed to state housing agencies, which run a variety of aid programs for homeowners. Special IG Christy Romero says the program has reached only 7 percent of the homeowners that states said they expect to help over the life of the program. It expires in 2017.

The Treasury Department says the IG's criticisms are misguided and the program will work in the long run.

[Associated Press; By DANIEL WAGNER]

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