SHERMAN, TX -- A new report finds that thousands of home-buyers, who were already deep in debt, were given mortgage help by the federal government. But even with the help, most defaulted on their loans anyway.
One senator from Oklahoma says it shouldn't have happened, and he blames the Federal Housing Authority.
The report by the Government Accountability Office, shows more than 6,000 people got nearly $1.5 billion in federal loans, even though they already owed about $78 million in taxes.
The study also shows more than half of these so-called "tax cheats" defaulted on those loans and lost their homes anyway.
"It cost the taxpayers about $1.4 billion dollars in money that they loaned that they won't get back. And whatever they recover out of that, there will be about $500 million that's never recovered, that the American taxpayers paid for," said Senator Tom Coburn.
Coburn says the Federal Housing Administration needs more regulations to keep from wasting taxpayer dollars.
People with tax debt are allowed federal aid, but they first have to work out a plan to repay the IRS. The study shows most people who got the aid, never made those plans.
"All this money that we put at risk and all this damage to our economy from a housing bubble, actually was good intention, but a complete failure," said Coburn.
"if you can't afford to repay the house, then you shouldn't get a home loan, and we wouldn't have foreclosure," said executive of the Greater Texoma Association of Realtors, Ron Schildknecht.
Schildknecht said foreclosures hurt the housing market. Even so, here in Texoma the market is looking up.
"The number of foreclosed homes is actually going down in our market, which is good news for everybody. Because then homeowners aren't competing with foreclosed homes, which typically bring a lower price," said Schildknecht
In this area, home sales have been up about 7 percent from 2011. The number of homes for sale has gone down, which means the price of those that are for sale is going up.
"The market is looking good in the Texoma area. We've got fewer homes for sale and homes that are for sale are going up in price," said Schildknecht.
The FHA did see the report and said it will try to clarify rules so lenders are clear about the eligibility requirements.
The Department of Housing and Urban Development also responded, and says it will work with the IRS to access information that would help it find the tax cheats.