At least 6,200 people delinquent on their taxes received $1.44 billion of mortgage insurance from President Obama’s 2009 stimulus, the Government Accountability Office reports, despite their ineligibility for the money under federal rules.
According to the GAO, “many individuals with tax debt take advantage of government programs, such as federal loan insurance, thereby reaping benefits from these programs while failing to pay their own taxes.” The bipartisan group of senators — three Republicans, two Democrats — who asked the GAO to conduct its study of the mortgage insurance program noted that the $1.44 billion went to people who owed a combined $78 million in unpaid taxes.
“Our analysis likely understates the amount of unpaid federal taxes because IRS data do not cover individuals who fail to file tax returns or who understate their income,” the GAO added. One person who owed $10,000 in taxes received $700,000 in mortgage assistance through the stimulus.
“The stimulus spending program was ill-conceived, with far too little oversight,” said Sen. Chuck Grassley, R-Iowa. “It shouldn’t surprise anyone, unfortunately, that tax dollars have gone to tax cheats.”
GAO attributed to the abuse of the program to “shortcomings in the capacity of [the Federal Housing Administration's] required documentation to identify tax debts.”
“We need to do more, not less, to help America’s housing recovery and keep people in their homes,” said Sen. Carl Levin, D-Mich. “But we can’t allow tax cheats to benefit from important federal programs. The FHA should, as GAO suggests, strengthen protections to make sure assistance goes to those who qualify.”