Mortgage assist funds reallocated
October 19, 2012
Millions of dollars from a settlement pool intended to help California homeowner victims of mortgage abuses has been diverted to the state’s general fund by Gov. Jerry Brown to help balance his budget. (San Francisco Chronicle)
California is one of 10 states nationwide that has been using the money for purposes other than for what it was intended — to mitigate some of the financial damage done to homeowners by providing relief programs, legal aid and counseling, foreclosure prevention, and anti-fraud measures.
Brown’s action was protested by Attorney General Kamela Harris, who had been part of the litigating team seeking the nationwide settlement from five major banks. The governor allocated most of the money, $410.6 million, to service housing bond debt, and is holding back $118 million for similar uses in 2013-14.
The author of a report studying the manner in which states have been using the settlement, Andrew Jakabovics, said, “The direct payments were intended to repair some of the harm done. It is wrong to have treated the money as if the state had won the lottery.”