States declining mortgage settlement money for other uses

In a budget proposed this week California joined more than a dozen countries, which want to fill the gaping deficit, money paid by the largest banks of the nation and to prevent foreclosure, investigations of fraud and blunting of the ill effects of the crisis in the hull. California was awarded over 400 million dollars of banks, as well as Gov. Jerry Brown proposed the use of the majority of this amount to pay the debts of the State.

The money is part of a national settlement valued at 25 billion dollars and over abuses in their processes of mortgage and foreclosure, agreed with five large banks.

The settlement, reached in February after the first year of conferences and intervention by the administration of Obama, is the second largest in history, involving the State final of the settlement of the tobacco industry and represents the first large-scale commitment from banks to provide direct assistance to borrowers.

As part of the settlement the banks agreed to pay the States 2.5 billion dollars, money intended to help homes and mitigate the effects of the increase in foreclosure. But critics complain that this is the only cash, banks have been must pay the other comes in the form of “loans” for the reduction of mortgage bonds and other activities. Even relatively small amount proved too great a temptation for legislators.

Only 27 Member States have devoted all their funds from banks, housing programs, according to a report by the partners of the community of the enterprise, the national affordable housing group. So to about 15 countries have said they will use all or most of the money for other purposes.

In Texas, 125 million dollars go directly into the General Fund. Missouri will use its 40 million dollars to limit cuts in higher education. Indiana is spending more than half their distribution to pay energy bills for families with low incomes, while Virginia will use most of its 67 million dollars to help revenue to local authorities.

Some other States such as California with air-to-air air problems by the housing bust are spending money for something other than the release of the homeowner. Georgia, where home prices are still falling, will use its $ 99 million to attract companies to the State.

“The Manager has decided to use the last money for economic development,” says spokesman Nathan deal of Georgia Governor, Republican. “He believes that the best way to prevent foreclosures among honest dwellings are difficult times is to create jobs here in our State.”

Andy Schneggenburger, Executive Director of the Atlanta Housing Developers Association of Neighborhood-Based, said the decision showed “a real lack of understanding of the depths of the foreclosure problem.”

2.5 billion is intended to be under the control of attention, which negotiated the settlement with five banks – Bank of America, Wells Fargo, JPMorgan Chase, Citigroup and ally. But there is enough room to wiggle in the agreement or in separate periods agreed upon by each State, to give Lawmakers and Governors wide latitude. For example, money shall be regarded as “civil sanctions” earned by the State, and some leaders have argued that States are entitled to money, because the housing crash decimated collections of taxes.

Shaun Donovan, the Secretary of the federal housing, is privately urging civil servants to spend money as intended. “Other uses fail to emphasize the opportunities presented by the transaction to real, concerted relief for homeowners and communities in which they live,” he said on Tuesday.

Some Attorneys General met Tycho requests to repurpose of money, while others have protested. Lisa Madigan, democratic Attorney General of Illinois, says it will oppose any efforts to divert the funds. Tom Horne, Arizona Republican Attorney, said he did not agree with the removal of the State to take around half its 97 million dollars, which officials said was needed to close.

But Mr Horne, said he does not oppose the shift because the Governor and legislative authority in budgetary matters. Arizona Center for law in the public interest says it will Sue to stop the Horn of the Mr by transfer of money.

Robbie Brown contributed reporting.

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