Several states have already announced that they plan to use some of the funds they receive from the $25 billion foreclosure fraud settlement for budget items other than helping homeowners, despite that being the purpose of the money. Ohio plans to use some of the funds to demolish vacant homes, while Wisconsin, Vermont, Maryland, and Pennsylvania are contemplating using the money for thing entirely unrelated to housing.
According to the Atlanta Journal Constitution, Georgia is set to become the latest state to join this list, with Gov. Nathan Deal (R) set to add more than $100 million of the state’s settlement money to Georgia’s rainy day fund:
“The state constitution requires that the money go into the state treasury. The governor would prefer that it go from there to the rainy day fund,” said [Deal spokesman Brian] Robinson.
The rainy day fund is state savings to cover emergencies and hard times.
Of course, one could definitely argue that the hard times are now in terms of Georgia’s housing market. One third of the state’s homes are underwater (meaning the owner owes more on the mortgage than the house is currently worth), the 5th highest percentage in the nation. One in every 328 Georgia housing units received a foreclosure notice in January of this year.
The foreclosure fraud money was not intended to paper over state budget problems, and it certainly wasn’t meant to be stashed away in a state’s rainy day fund to be broken out whenever the governor feels like it. Deal’s decision is reminiscent of when Texas Gov. Rick Perry (R-TX) stashed money meant to save education jobs into the Lone Star State’s rainy day fund, earning him a rebuke from Congress.