A state-run program intended to provide relief to beleaguered homeowners is instead adding to the heartache for some.

A state-run program intended to provide relief to beleaguered homeowners is instead adding to the heartache for some.

Angela and Michael Manring of Talent say they were dropped from the Mortgage Payment Assistance Program after an audit showed that they missed being eligible by a matter of a few dollars. Now, they worry they'll lose their home.

"I'm in a disaster," said Angela Manring, a former bank collections manager. "They're wrong. I can't lose this house ... . I've was flipping out when I got the letter ... . We have no food left at the end of the month."

The new program is funded by federal dollars intended to keep people in their homes during the housing crisis. Part of the Oregon Homeownership Stabilization Initiative, it provides mortgage payments for income-challenged people for a year, up to a maximum of $20,000. It has been besieged by complaints over a variety of issues, many related to poor communications.

Sen. Alan Bates, D-Medford, says the agency is "a mess" and will be investigated by the Joint Ways and Means Committee during the Legislature's one-month February session.

"It's not a well-run program," said Bates. "We've been getting lots of complaints. They have a pittance to do the job with, maybe enough to serve 5 percent of need in Oregon, but they're also dragging their feet. It's a mess... . There's a lack of clarity, transparency and aggression in getting it up and running."

The Manrings said they got a letter from OHSI on Jan. 3 saying a random audit of their financial statement showed their income decline didn't reach 25 percent in 2010, as required by the program, so, after six payments, the agency would no longer make payments on their three-bedroom home, which they've had for 18 years.

Both of the Manrings are on Social Security disability, which brings in $3,839 a month. Their mortgage is $1,150 a month. They had a $968 drop in income, they said, when their adult son, also on Social Security disability, moved out.

That left them within dollars of the required amount for eligibility. The frustration over that has only been compounded by the agency's lack of response to their inquiries.

"I don't know what to do. This is outrageous," said Angela Manring. ". . . I've tried and tried, but I can't reach them."

Bates said his office would work on the Manring case and others, trying to find out what happened.

"Once the program grants money to people, you don't pull it back later," Bates said. "That's the kind of thing people can't deal with. Why was the money awarded in the first place? People make plans based on the agency's decisions and now they're in a tough position."

Heather Safley of Medford said she was screened and approved by ACCESS in Medford, as well as OHSI and a bank but "underwriters at OHSI" then rejected her.

"My feeling is it's not well-managed and is not a priority (in state government), Safley said. "They've gone through several administrators and their criteria keep changing."

Barbara McDonald, a part-time bookstore worker living with her adult daughter in Central Point, was accepted into the program in October and dropped in December because, she says, a document appeared in her file showing an inconsistent date for a second mortgage a decade ago.

"It's absolutely ludicrous; it's their error," said McDonald, whose foreclosure is on hold while she appeals to OHSI. "My house is set to be auctioned on April 12 on the courthouse steps. If the appeal is denied, I will lose everything."

Ben Pray, OHSI public relations director, said his agency is a new, complex and understaffed organization and, like all agencies that award funds, must make random audits.

Some 4,000 mortgages have been supported statewide, totaling $40 million — and in Jackson and Josephine counties, 400 homeowners have been helped, he said, with audits eliminating 5 percent of them. Another 10 percent have "fallen out," he added, because of increased income, bankruptcy or other causes. Homeowners must report their income at the start of each month.

OHSI has operated, because of a state hiring freeze, with only four caseworkers, but recently was given an exemption from the freeze and will have eight on staff in February, said Pray.

"Nineteen states have been trying to figure out, on the fly, how to set up this program quickly," said Pray. "It's been a real challenge. We've built from ground zero and have learned a lot of lessons along the way. It's a complex program but it's going to be terrific."

OHSI has been awarded $220 million for mortgage stabilization and other homeowner programs to lessen the impact of the recession. Starting next week the agency will launch a Mortgage Payment Assistance Unemployment Program to assist homeowners who are receiving unemployment compensation and looking for work.

It will start in Jackson and Josephine counties in early February, Pray said.

Sen. Bates said the Legislature will step up supervision of the agency, which is part of Oregon Housing and Community Services. The OHCS director, Margaret VanVliet, testified Thursday before the Senate Consumer Protection Committee, giving an update on OHSI and, said Pray, expressing confidence in the program and new OHSI director Michael Auman.

Pray said OHSI disqualification letters provide the phone number, email address and website to appeal unfavorable audits. He also said processing of the appeals will be faster with a larger staff.

For more information on the program, see www.oregonhomeownerhelp.org.

John Darling is a freelance writer living in Ashland. E-mail him at jdarling@jeffnet.org.