Do you think the remaining settlement cash should go to:
- solely helping those harmed by foreclosure; or (79%, 83 Votes)
- filling in holes in the state budget? (21%, 22 Votes)
Total Voters: 105
Earlier this year California Attorney General Kamala Harris secured Californians $18 billion as part of a settlement with Big Banks for their abusive practices against homeowners.
Most of this money is allocated to providing homeowners with principal reductions, refinances, and to repair communities blighted by foreclosures. There is also $410 million in cash to be used at California’s discretion, which the Attorney General planned to hand over to housing counselors and legal services agencies.
Enter Governor Brown.
With a $15.7 billion deficit, Governor Brown clearly saw this settlement cash as a bonus to fill in some of the many gaps in the budget.
His plans? Use the money to make interest payments on bonds used for housing projects which include housing for low-income residents, seniors and battered women.
The Attorney General protests using the funds this way, claiming the settlement was intended to help homeowners affected by foreclosure, thus the cash should be limited to alleviating foreclosure abuses. The Attorney General has stated she will attempt to work with Governor Brown to reach a mutual agreement for the allocation of the funds.
Only 27 states are putting their settlement cash towards housing programs. Like California, the remainder plan to use the cash to fill state budget gaps.
first tuesday take
The settlement has so far been a dud. The $410 million paid by the Banks (a diminutive amount when compared to the $15.7 billion deficit Governor Brown is attempting to fill) is now being squabbled over.
The billions of dollars in housing “credits” resulting from the settlement have yet to begin helping any homeowners stay in their homes.It is estimated to take six to nine months for servicers to even begin notifying homeowners eligible for assistance, according to the national mortgage settlement website. Thus, help is still far from reality and victims of foreclosure abuse are not receiving the assistance they so sorely need.
The Attorney General’s allocation of the cash to housing counselors has the potential to create jobs and will benefit housing industry over time, as financial literacy is a benchmark of a stable housing market. Investing in financial literacy will produce a far greater dividend in stable housing than funding government debt, which should have already been budgeted for and produces zero return for Californians.
The goal of this settlement was to help homeowners who should not have been foreclosed upon and communities affected by the foreclosure crisis – if we do not keep the settlement’s implementation focused on this goal then we make no strides toward the housing market’s recovery.
Re: Gov. Brown has his own plans for mortgage settlement cash from the Los Angeles Times