Tags: housing | settlement | monies | states

ProPublica: States Hold on to Monies from Housing Settlement

By    |   Thursday, 25 Oct 2012 07:40 AM

Florida has the highest percentage of home loans in foreclosure in the nation, but the state is sitting on $300 million earmarked to help. It is not the only state where monies to help the housing crisis remain in limbo or have been used for other purposes, ProPublica reported.

The investigative journalism group said that $2.5 billion has been sent directly to state governments as part of a bigger $25 billion national settlement with five of the country’s biggest banks. The settlement resolved allegations of wrongful foreclosures and other mortgage servicing abuses.

Of that $2.5 billion sent to state governments, about $1 billion has been pledged for housing-related programs, and an equal amount has been diverted to fund programs unrelated to the foreclosure crisis, ProPublica reported.

Editor's Note: Economist Warns: ‘Money From Heaven a Path to Hell.’ See Evidence.

Meanwhile, the uncertain status of Florida’s $300 million continues. There, state Attorney General Pam Bondi pledged to make the money available to homeowners, but state legislators insist it first needs to go through the appropriations process.

“We were very happy about the attorney general’s commitment early on that the money be used within the spirit of the settlement,” said Jaimie Ross, president of the Florida Housing Coalition, an advocacy group. “But is it just going to sit there until the legislature starts so that we can wait to see how they want to use it? The silence is deafening.”

Other states have committed the use of their funds in a variety of ways. In cash-strapped California, which received $410 million, just $18.4 million went to easing the housing problem with the rest going to the state’s general fund, ProPublica reported. In Arizona, the state assembly siphoned off $50 million — more than half the state’s total — to the general fund, and New Jersey is spending its $75 million on social programs including affordable housing.

Of Michigan’s $97.2 million, $10 million went to public schools and the rest to housing-related programs, ProPublica reported. All of Pennsylvania’s $66.5 million went to housing and consumer protection programs, and Washington state channeled its $54 million to counseling, legal aid and city demolition programs.

Other states besides Florida where the state governments have yet to decide where at least some of the housing settlement monies will go are Nevada, Alabama, Louisiana, Kansas, Texas and Alaska.

The Obama administration trumpeted the overall $25 billion settlement last February after it was negotiated with Bank of America, Citigroup, JPMorgan Chase, Wells Fargo and Ally Financial.

“[The deal] benefits struggling homeowners now, not some time in the future when the help they need may be too late,” said Bob Ryan, a senior official at the Department of Justice, according to The Huffington Post at that time.

“This action, while significant, is only one step of many,” said a spokesperson from the Department of Housing and Urban Development, which served as one of the Obama administration’s lead negotiators on the deal, at that time. “But this action is momentous.”

Editor's Note: Economist Warns: ‘Money From Heaven a Path to Hell.’ See Evidence.

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Florida has the highest percentage of home loans in foreclosure in the nation, but the state is sitting on $300 million earmarked to help. It is not the only state where monies to help the housing crisis remain in limbo or have been used for other purposes, ProPublica reported.
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Thursday, 25 Oct 2012 07:40 AM
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