Banks’ foreclosure settlement funds used to offset budget gaps

Miami /
May.May 16, 2012 02:15 PM

The U.S. government’s settlement against five big banks was supposed to benefit distressed homeowners, but many states cannot resist diverting the funds to make-up for budget shortfalls, the New York Times reported. When the government reached the estimated $25 billion settlement with banks over mortgage and foreclosure abuses, $2.5 billion was earmarked for states to prevent foreclosures, investigate fraud and alleviate general housing market woes. Now, 15 states have announced that they will be budgeting the money for items other than housing — although 27 states have agreed to use their entire distribution as intended.

The ambiguity of the federal government’s directives has allowed states to argue that a myriad of unrelated projects would benefit the local housing market. For instance, Georgia plans to use $99 million from the settlement on subsidies designed to bring businesses to the state, claiming “that the best way to prevent foreclosures amongst honest homeowners who have experienced hard times is to create jobs here in our state.”

On Tuesday, Shaun Donovan, federal housing secretary, pressed governors to reconsider. “Other uses fail to capitalize on the opportunities presented by the settlement to bring real, concerted relief to homeowners and the communities in which they live,” Donovan said. But state governments are not backing down and in many capitols the money will almost certainly be spent on non-housing related projects. [NYT]


Related Articles

arrow_forward_ios
(Getty)
Active agents in Miami drop 36% in a year, as market cools
Active agents in Miami drop 36% in a year, as market cools
Miami-Dade County mayor Daniella Levine Cava, Citadel's Ken Griffin
Ken Griffin kicks in $3M to Miami-Dade fund for housing, other initiatives
Ken Griffin kicks in $3M to Miami-Dade fund for housing, other initiatives
Homes
South Florida home sales plunge, prices in flux in the fourth quarter
South Florida home sales plunge, prices in flux in the fourth quarter
From left: LeBron James, Ken Griffin, Miami-Dade Mayor Daniella Levine Cava, Jeff Bezos, Vlad Doronin, and Stephen Ross (Getty)
Here’s what went down in South Florida real estate in 2022
Here’s what went down in South Florida real estate in 2022
Miami skyline
South Florida home sales keep falling as price growth slows
South Florida home sales keep falling as price growth slows
(Illustration by The Real Deal with Getty)
“It’s not dead, it’s just different.” South Florida resi slowdown persists
“It’s not dead, it’s just different.” South Florida resi slowdown persists
Danielle Hale
Slowdown is “paradoxical:” Realtor.com’s chief economist on Miami housing market’s future
Slowdown is “paradoxical:” Realtor.com’s chief economist on Miami housing market’s future
From left: Ansorg Development's Karl-Ulrich Ansorg, Tulip Group's Kobi Elbaz, Ofir Gabriel, and Amit Kort in front of 234-264 Northeast 34th Street in Miami (Getty, Google Maps, YouTube/Tulip Group Thailand, usbotschaftberlin, Public domain - via Wikimedia Commons)
Inside look at planned Edgewater mixed-use condo tower
Inside look at planned Edgewater mixed-use condo tower
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...