Watchdog to audit White House housing aid program

WASHINGTON, July 13 (Reuters) - A $2.1 billion White House program aimed at helping struggling homeowners stay in their homes will be audited to see if the Treasury fairly distributed funds and established procedures to prevent waste, fraud and abuse, a Republican lawmaker said on Tuesday.

Representative Darrell Isa, who had requested the investigation, said it would be conducted by Neil Barofsky, the special inspector general for the Treasury's Troubled Asset Relief Program.

The program, known as the Hardest Hit Fund, targets homeowners in the 10 states most devastated by the housing collapse.

"As with other foreclosure-mitigation programs, taxpayers are in the dark about how their money will be spent," said Issa, who the New York Times recently dubbed as U.S. President Barack Obama's "annoyer-in-chief."

In laying out the grounds for the audit, Barofsky told Issa it was too soon to investigate the effectiveness of the program, which provides funds to state housing agencies to prevent foreclosures.

Obama in February announced a $1.5 billion program aimed at helping California, Arizona, Nevada, Florida and Michigan. An additional $600 million was added in March for Ohio, North Carolina, Oregon, Rhode Island and South Carolina.

The fund shifted money from an existing $50 billion program, the Home Affordable Modification Program, widely criticized as ineffective. The $50 billion authorization is itself part of the $700 billion bank rescue package approved by Congress in late 2008. (Reporting by Corbett B. Daly; Editing by Leslie Adler)