By Chris Butler | Tennessee Watchdog
NASHVILLE — The federal government insisted Tennessee officials spend $217 million in taxpayer money as quickly as possible as interest free loans for homeowners — and the state has happily obliged, giving away all but $73 million.
The state plans to pass the rest of the money on before next spring.
As Tennessee Watchdog reported last year, however, homeowners don’t necessarily have to pay back those loans, which can range as high as $40,000 per household, per a mandate from the U.S. Treasury Department.
These loans are forgivable after five years, said Patricia Smith, spokeswoman for the Tennessee Housing Development Housing Agency, which awarded the loans on the federal government’s behalf.
As of this month, THDA officials have closed 4,482 of those loans and committed 4,803, Smith said.
“We are required to have the funds allocated by the end of 2014 — but based on our production we expect that the funds will be allocated before the end of the first quarter of 2014.”
Tennessee was one of 17 states chosen to participate in the program; federal officials deemed that it had a higher-than-average unemployment rate. In total, the federal government awarded the 17 states $7 billion as part of the Hardest Hit Fund.
A U.S. Treasury spokeswoman told Tennessee Watchdog last year her agency’s goal was to seek homeowners who are otherwise too embarrassed to ask for government assistance. The help includes payments for mortgage assistance, such as property taxes, homeowners’ insurance or past-due mortgage payments.
In Tennessee, homeowners who qualify for this assistance, distributed through the Keep My Tennessee Home program, may receive up to 36 months of monthly mortgage payments. Only homeowners who have lost more than 30 percent or more of their income may qualify.
The THDA originally loaned just $20,000 to cover mortgage expenses for qualifying homeowners. With the federal money, THDA officials decided, however, to increase the maximum amount of the loan to $40,000.
“The federal government is strongly encouraging us to commit these dollars quickly,” THDA Executive Director Ralph Perrey said in an interview last year.
With help from the state’s Department of Labor and Workforce Development, THDA officials said they planned to distribute brochures promoting the program at businesses — at the exact time those business owners announce layoffs.
Contact Christopher Butler at email@example.com.
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