Three years ago, Dan Patton figured losing his home to foreclosure was a matter of when, not if.

The La Pine resident closed his plastering business in 2009 after the housing market went bust. With a family to feed and an increasingly delinquent mortgage to pay, he took odd jobs while bracing for the worst.

Today, the Patton family still lives in their home, thanks in part to $5,000 from the Mortgage Payment Assistance Unemployment program that helped him make house payments.

“It got us through a year,” Patton said. “Don’t get me wrong, it didn’t completely bail us out, but it got us through until I was able to get back to work.”

Patton is one of nearly 8,300 Oregon home-owners who have benefited from Oregon foreclosure relief programs.

Yet more than three years after the U.S. Treasury Department announced $7.6 billion in housing relief aid for Oregon, 17 other states and Washington, D.C., many of those recipients are still having troublegetting their share of the funds to struggling homeowners.

Though Oregon has spent a larger share of its funds than any other state, two of its programs haven’t worked nearly as well as state officials hoped.

The Loan Refinance Assistance Pilot Project, designed to help struggling Deschutes County residents reduce their mortgage payments, ran into a serious roadblock shortly after its launch last year. Fannie Mae and Freddie Mac, the government-owned lenders that own half the country’s mortgages, wouldn’t participate because of restrictions from its regulator, the Federal Housing Finance Agency.

“They were a willing partner early on in the development of this program,” said Ben Pray, spokesman for the Oregon Department of Housing and Community Services, the state agency administering the federal funds.

Fannie Mae, in particular, had negotiated with the state, and offered refinancing under the program for a short time after its launch.

“In our interactions with them, they were willing to participate on a trial basis, but ultimately, they weren’t able to continue,” Pray said.

The state hoped to help 300 homeowners in Deschutes and Jackson counties refinance through the pilot project, but has accepted 78 applications to date and have expanded into other counties to try and boost that figure.

The disqualification of Fannie and Freddie loans has kept numerous Central Oregon homeowners out of the program who would otherwise qualify.

It has also drawn the ire of U.S. Sen. Jeff Merkley, D-Ore., who sits on the U.S. Senate Committee on Banking, Housing and Urban Affairs.

“Homeowners looking for help don’t care what big financial entity owns their mortgage, and they shouldn’t have to,” Merkley said in a statement to The Bulletin. “I’m very frustrated that bureaucrats at the FHFA have refused to allow Fannie Mae and Freddie Mac to participate in this program.”

The Loan Preservation Assistance program, meanwhile, has been plagued by slow application processing times.

In Central Oregon, applications for the program have taken an average of six months to process, said Lynne McConnell, HomeSource manager for NeighborImpact, the regional agency handling local applications for two of the foreclosure-prevention programs.

“These are people who are behind on their mortgages,” McConnell said. “Waiting six months is often the difference between being foreclosed on or not. That’s been very frustrating. By the time people are able to get assistance, they’re already out of the house.”

Just 24 Central Oregon residents have been approved for the loan preservation program, which helps homeowners who have experienced income loss make up some of their missed loan payments. Only homeowners with less than $20,000 in unpaid loans can qualify. The long waiting period means missed payments pile up.

“Oftentimes people submit their application, and six months down the line they owe more than $20,000,” disqualifying them, McConnell said. “It’s been a real challenge.”

Oregon’s share

In 2010, federal officials handpicked the states, and Washington, D.C., to receive the money because their unemployment and foreclosure rates exceeded the national average. Each has until the end of 2017 to spend its share of money from the program, called the Hardest Hit Fund.

Oregon received $220 million. The state had spent about $101 million by the end of 2012, Treasury Department data show, including $21.7 million on administrative costs, setting up an agency called the Oregon Homeownership Stabilization Initiative to oversee the programs.

An analysis of each state’s use of Hardest Hit Fund money shows Oregon has done a better job getting funds to troubled homeowners than other recipients.

By the end of 2012, Oregon had allocated 46.3 percent of its total funds, the highest percentage, according to a year-end analysis by the Treasury Department.

Washington, D.C., ranked second, at 45.5 percent, followed by Rhode Island, at 45 percent.

By contrast, Arizona had spent 6.4 percent of its funds by the end of 2012. Indiana, Georgia and Florida also had spent less than 10 percent. Nationwide, about 16.5 percent of the $7.6 billion in funds had been spent.

The Treasury Department has repeatedly prodded states to get the money out faster.

Progress and frustration

But the problems with some of Oregon’s programs highlight the unforeseen consequences of rolling out large programs in a short time-frame.

The state is ending the loan preservation assistance program this month. The Oregon Homeownership Stabilization Initiative first projected that about 2,000 Oregonians would benefit. But just 850 Oregon homeowners applied, and more than 300 of them were approved.

State officials administering the programs admit to making some mistakes. While overestimating the number of applicants for some programs, they underestimated others.

Initially, the state figured about 5,000 homeowners would get assistance through the Mortgage Payment Assistance Unemployment program. They were bombarded with nearly 20,000 applications in the first month.

“We had to change our processes considerably,” Pray said.

The department increased its staffing level from about 15 people in 2010 to 45 today, focused solely on application processing and outreach for the Hardest Hit Fund programs.

“In many ways, we had to become a bank. We had to become underwriters, create loan documents, we had to just do a lot of things that were new to us, especially on this kind of scale.”

The agency set up a website aimed at teaching Oregonians about the programs, with online evaluations for homeowners to determine if they’re eligible.

The Loan Refinance Assistance Pilot Project, first offered only in Deschutes and Jackson counties, expanded this month into Crook, Jefferson and Josephine counties.

Pray admitted things haven’t always gone as planned for the state, but said officials have made considerable progress. Of the 323 Central Oregon residents approved for the Mortgage Payment Assistance program, 231 of them have been approved in the last year.

“We’re giving each application more scrutiny now. It’s a constantly evolving process,” Pray said. “We can make as many improvements as we can… We think it’s working well. But it’s not perfect.”

Oregon relief programs

Between December 2010 and March 2012, the Oregon Department of Housing and Community Services unveiled five foreclosure relief programs funded by U.S. Treasury Department.

Today, three of them are active in Central Oregon. Combined, they’ve provided aid to nearly 8,300 homeowners statewide, 422 of them in Central Oregon, according to figures from the Oregon Homeowners Stabilization Initiative, the program set up by OHCS to administer the funds.

• Mortgage Payment Assistance Unemployment program: Helps qualified homeowners across Oregon pay their mortgage for up to a year, or up to $20,000, whichever comes first.

• Loan Refinancing Assistance Pilot Project: Helps homeowners in Deschutes, Crook, Jefferson, Jackson and Josephine counties refinance their mortgages to reflect the current value of their home.

• Loan Preservation Assistance program: Provides up to $20,000 per homeowner to help those set back by job or income losses get current on their mortgages.