NeighborWorks was once deemed ‘unnecessary’ by the CBO
A massive coronavirus relief bill that Democrats plan to pass on a party-line vote includes millions of dollars for a taxpayer-funded nonprofit group with a scandal-ridden history.
NeighborWorks America, an organization chartered by Congress that acts as a sort of Red Cross for homeowners, will receive $100 million through 2025 as part of the nearly $2 trillion emergency spending package, according to a draft released Friday by the House Budget Committee.
But the nonprofit has a track-record of management shortcomings, including sweetheart contracts, document fudging and sudden departures of top officials. According to a 2015 report from Bloomberg News, executives at NeighborWorks awarded at least two large jobs to insiders without bidding — even though under federal rules, recipients of government funds must put jobs worth more than $25,000 up for competition, or justify why they didn’t do so.
Bloomberg reported that NeighborWorks managers signed off on a multimillion-dollar technology deal with a recently formed contractor, which had board members in common with the non-profit and used the same law firm. The contractor overcharged by as much as 20 times, according to one audit.
NeighborWorks later justified the hiring of Hope LoanPort, which billed $3 million over two years, by saying it did not have enough time to seek other vendors. But NeighborWorks has been discussing using Hope LoanPort for the job eight months before the contract was signed, according to an auditor.
That preceded the abrupt departure of four top officials from the non-profit.
In a statement to FOX Business, NeighborWorks said it takes “with the utmost seriousness the responsibilities entrusted to us” and is prepared to support the securement and retention of housing for families affected by the pandemic.
“If Congress determines that we are the appropriate stewards to support state housing agencies, counseling intermediaries, and local non-profits, as they endeavor to keep families from eviction, foreclosure, and homelessness, we are prepared to bring our knowledge and expertise to the table,” the nonprofit said, adding: “Our record speaks for itself, as does our commitment to the families and communities we serve.”
The nonprofit oversees a network of locally run groups that are involved in housing, neighborhood revitalization and community building. NeighborWorks distributes much of the federal money it receives to those groups, which then provide mortgage advice and sometimes financial aid in an effort to stop foreclosures.
Since the start of the subprime mortgage crisis in 2008, the group has received billions of dollars in government funding.
The Congressional Budget Office, in a report from 2009, said that NeighborWorks is a relatively “minor source of funding” for the smaller satellite groups and noted there are other federal programs through the Department of Housing and Urban Development that support efforts to rehabilitate low-income housing and promote homeownership and community development. It said the nonprofit could be considered “unnecessary.”
“If the Congress wished to continue to fund mortgage and financial counseling services for people facing foreclosure, it could do so without channeling the money through NeighborWorks America,” the nonpartisan agency said.
The inclusion of an additional $100 million in funding for Neighborworks — which already has a budget of about $160 million for fiscal year 2021 — has drawn a swift rebuke from deficit-weary Republicans already critical of the bill’s size and scope.
“Congress has passed five overwhelmingly-bipartisan COVID-19 relief bills,” Steve Kelly, a spokesperson for Sen. Pat Toomey, R-Pa., and Senate Banking Committee Republicans, told FOX Business. “None of them earmarked funding for NeighborWorks as the organization has nothing to do with fighting COVID-19.”
GOP lawmakers have argued the aid needs to better target those who need it the most and have slammed Democrats for including provisions unrelated to the pandemic. The nation’s deficit totaled a record $3.1 trillion for the 2020 fiscal year, and the national debt is poised to hit $30 trillion if President Biden signs the $1.9 trillion bill.
“Democrats want to ram through a $2 trillion partisan giveaway for their favored projects, programs, and causes,” Kelly said. “Let’s be clear, sending $100 million to NeighborWorks will not help administer vaccines, reopen schools, or produce new COVID-19 therapeutics. This is purely a $100 million taxpayer gift to the left.”
Congressional Democrats are planning to use a procedural tool known as budget reconciliation to pass the bill without any Republican buy-ins, with the goal of sending the legislation to Biden’s desk before a March 14 jobless aid cliff. Senate Minority Leader Mitch McConnell said he does not believe a single Republican in the upper chamber will support the bill.
But Democrats have defended the massive spending proposal, arguing the economy is still a far way from its pre-crisis level, with unemployment officially at 6.3%. There are roughly 10 million fewer jobs than there were last year in February, before the crisis began.
The relief measure also includes a third $1,400 stimulus check for Americans earning less than $75,000, increases supplemental unemployment benefits by $400 a week through the end of August, allocates $50 billion toward helping small businesses and gives $350 billion for state and local governments, among other provisions.