As part of the $25 billion foreclosure fraud settlement forged between the nation’s five biggest banks and a coalition of federal agencies and state attorneys general, individual states were granted $2.5 billion. That money was meant to provide a variety of services to troubled homeowners, but, as a new report from the housing advocacy organization Community Enterprise Partners shows, less than half of that money is actually headed for its intended use:
Six months after finalizing the landmark $25 billion National Mortgage Settlement, the District of Columbia and the 49 states who were parties to the settlement have been allocating and distributing their respective shares of the $2.5 billion that was designated for them, but less than half of the announced expenditures will be used as intended. Direct payments to the states were intended to help prevent foreclosures, stabilize communities, and prevent or prosecute financial fraud. To date, states have announced plans to spend $966 million for housing and foreclosure-related activities, while $988 million has been diverted to states’ general funds or for non-housing uses. There is $588 million remaining to be allocated, of which Texas and Florida comprise the lion’s share and with the rest spread out among states that have already begun to roll out their plans.
As this map shows, several states are using a minimal amount of their settlement funds to help homeowners, while a few (including California) are using none at all:
Both Democratic and Republican governors are guilty of siphoning off funds meant for homeowners. Meanwhile, the banks continued their abusive practices that led to the settlement in the first place.