	Background

Treasury established HHF in February 2010 to help stabilize the housing  market and assist homeowners facing foreclosure in the states hardest hit  by the housing crisis. These  programs had to meet the requirements of the Emergency Economic  Stabilization Act of 2008 and be approved by Treasury. For example, HFAs with blight elimination  programs may choose to provide HHF funding to a local land bank to  demolish and green blighted properties in distressed housing markets. Treasury’s Monitoring of HHF Addresses or Partially Addresses Leading Practices for Program Oversight

Treasury’s policies and procedures to monitor HFAs’ implementation of  the HHF program address 10 leading monitoring practices, including  practices related to the collection of periodic performance reports and  validation of performance through site visits. However, Treasury does not systematically collect or evaluate HFAs’ risk  assessments. In addition, Treasury is missing an opportunity to help ensure that risk  levels are appropriate. Treasury also directs HFAs to establish and execute their own internal  control system, but it does not require HFAs to consistently document  which of their staff are responsible for internal control execution. Because some of Treasury’s performance  measures are not clearly stated and because Treasury did not design  consistent methodologies for HFAs to use in setting targets, as HFAs  close down their HHF programs, Treasury has a limited ability to compare  performance across HFAs or aggregate these data to evaluate how well  the HHF program as a whole is achieving its goals. As of September 2018,  Treasury had disbursed $9.1 billion of the $9.6 billion obligated under  HHF. Most HFAs have met Treasury’s 2016 and 2017 utilization thresholds. As a result, Treasury did not reallocate any HHF  funds for that year. Data on the Extent to Which HHF Programs Met Targets Are of Limited Use Because Treasury Did Not Develop a Consistent Methodology for Calculating Targets

The targets that HFAs set are of limited use for evaluating the  performance of individual programs, program types, HFAs, or the HHF  program overall. Further, our guide to designing evaluations states that  where federal programs operate through multiple local public or private  agencies, it is important that the data agencies collect are sufficiently  consistent to permit aggregation nationwide, which allows evaluation of  progress toward national goals. Although HHF programs must  stop disbursing funds by December 31, 2021, many of the programs have  already ended or are in the process of winding down, making it too late  for changes to Treasury’s approach to performance measurement to have  a meaningful impact. However, we note that if Treasury were to extend  the current program, as it did after Congress provided additional funding  in 2015, or if Congress were to establish a similar program due to a future  housing crisis, it would be useful at that time for Treasury to develop a  program evaluation design that would allow the agency to assess overall  program performance, as well as assess performance across HFAs and  program types. In  its comments, reproduced in appendix IV, Treasury agreed with our  recommendations and stated that it has already taken steps toward  addressing them by enhancing the existing review procedures for HFA’s  risk assessments and staffing updates. GAO staff who made major contributions to this report are  listed in appendix V.

Appendix I: Objectives, Scope, and Methodology

The objectives of this report were to (1) determine the extent to which the  Department of the Treasury’s (Treasury) monitoring of the Hardest Hit  Fund (HHF) addresses leading practices for program oversight, (2)  provide information on housing finance agencies’ (HFA) active programs  and the status of HFAs’ progress toward program targets, and (3)  describe challenges in implementing HHF programs that HFAs and others  identified.
Why GAO Did This Study

Treasury established the HHF program in 2010 to help stabilize the housing market and assist homeowners facing foreclosure in the states hardest hit by the housing crisis. Through HHF, Treasury has obligated a total of $9.6 billion in Trouble Asset Relief Program funds to 19 state HFAs. HFAs use funds to implement programs that address foreclosure and help stabilize local housing markets—for example, by demolishing blighted properties. Congress extended HHF in 2015, and HFAs must disburse all HHF funds by December 31, 2021, or return them to Treasury.
The Emergency Economic Stabilization Act of 2008 included a provision for GAO to report on Troubled Asset Relief Program activities. This report focuses on the HHF program and examines, among other objectives, (1) the extent to which Treasury's monitoring addresses leading practices for program oversight and (2) HFAs' progress toward program targets.
GAO reviewed documentation of Treasury's HHF monitoring practices, interviewed HFAs (selected based on differences in program types implemented) and Treasury officials, and reviewed information on how HFAs developed program targets.

What GAO Found

For its Housing Finance Agency Innovation Fund for Hardest Hit Markets (HHF), the Department of the Treasury (Treasury) has addressed or partially addressed all 14 leading monitoring practices that GAO identified. For example, Treasury periodically collects performance data from housing finance agencies (HFA) and analyzes and validates these data. However, while Treasury requires HFAs to regularly assess the risks of their programs, it does not systematically collect or analyze these assessments. As a result, Treasury is missing an opportunity to ensure that HFAs are appropriately assessing their risk. Also, Treasury does not require HFAs to consistently document which of their staff are responsible for internal control execution. This documentation could help HFAs wind down their programs, particularly as staff turn over.
Most HFAs met Treasury's goals for drawing down HHF funds, with $9.1 billion disbursed to HFAs as of September 2018. HHF programs have assisted hundreds of thousands of distressed homeowners since 2010. However, the data Treasury has collected are of limited use for determining how well HFAs met their goals for assisting households and demolishing blighted properties, or for evaluating the HHF program overall. For example, Treasury did not develop a consistent methodology for HFAs to use when setting performance targets, which limits Treasury's ability to compare across programs or assess the HHF program as a whole. Further, GAO's guide to designing evaluations states that where federal programs operate through multiple local public or private agencies, it is important that the data these agencies collect are sufficiently consistent to permit aggregation nationwide. Although HFAs have until the end of 2021 to disburse their HHF funds, many programs are beginning to close, making it too late for meaningful changes to Treasury's approach to performance measurement. However, should Congress authorize Treasury to extend the program beyond December 2021 or establish a similar program in the future, it would be useful at that time for Treasury to develop a program evaluation design that would allow the agency to assess overall program performance, as well as performance across HFAs and program types.

What GAO Recommends

GAO recommends that Treasury collect and evaluate HFAs' risk assessments and routinely update staffing documentation. Treasury agreed with these recommendations and stated that it has already taken steps toward addressing them.