‘Mortgage Settlement’ Funds Paying for Prisons, Not Foreclosure Relief
Needy states use housing aid cash to fund prisons, education shortfalls, and plug budgets
As part of a financial settlement over fraudulent mortgage practices earlier this year, some of the nation’s largest banks agreed to make payments to state government totaling $2.5 billion that would be earmarked for victims of wrongful foreclosure and other distressed homeowners. Instead, reports the New York Times today, a majority of those funds are going to plug state budget shortfalls, leaving homeowners without recourse and validating critics who questioned the strength of the deal when it was announced in February.
The total settlement was for $25 billion, but only a tenth of that was to come in the form of cash payment to the states. The remainder was to come in the form of “credits” for reducing mortgage debt and other loan activities.
Andy Schneggenburger, the executive director of the Atlanta Housing Association of Neighborhood-Based Developers, told the Times the decision showed “a real lack of comprehension of the depths of the foreclosure problem.”
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The New York Times: Needy States Use Housing Aid Cash to Plug Budgets
Only 27 states have devoted all their funds from the banks to housing programs, according to a report by Enterprise Community Partners, a national affordable housing group. So far about 15 states have said they will use all or most of the money for other purposes. …
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