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Just 35% of money to aid homeowners has been spent

WASHINGTON — Three and a half years after Congress allocated $7.6 billion to help struggling homeowners avoid defaulting on their mortgages, states have been slow to spend that money, leaving billions of dollars in federal coffers as the housing market recovers.

A report from the special inspector general overseeing funds appropriated by the Troubled Assets Relief Program, TARP, shows 18 states and the District of Columbia have spent just $1.7 billion since the bill passed in 2010. In the meantime, those states have dramatically revised downward the number of homeowners they say they can help.

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The report sparked a tussle between the inspector general’s office, which said the Treasury Department hadn’t followed its earlier recommendations, and Treasury, which said it is working with states to spend the money wisely.

The Hardest Hit Fund was to help an estimated 546,000 homeowners through state-sponsored programs. But as of June, the states and the District had aided 146,356 participants.

According to the report, the states had drawn just $2.7 billion as of mid-2013, or 35 percent of the appropriations. More than $300 million has been spent on administration.

The District and all 18 states that got grant money have set up programs to provide unemployment assistance. Most states have programs to modify mortgages. Five have programs to help homeowners with second liens.

The inspector general said, ‘‘Treasury is refusing to hold itself or the states accountable to any goal.”

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