Investigative reporting by ProPublica recently revealed that lots of state governments involved in the big Mortgage Foreclosure Fraud settlement between the Big Banks and the State Attorneys General have taken big chunks of the settlement monies for use in things other than helping foreclosure fraud victims. According to the ProPublica expose, $974,000,000 of the settlement monies have been used against budgets in the red, or to fund stuff not connected with foreclosure issues — to the tune of almost 40% of the Settlement Monies being diverted.
And, yes, Florida is one of those states with their hands in the Settlement Cookie Jar.
Earlier this month, we posted Pam Bondi’s request for input on how Florida’s $300+ million share of the Mortgage Foreclosure Fraud settlement should be used. Hopefully, some Average Joe citizens gave the Florida Attorney General their take on things.
It’s on the record that Florida Realtors provided their opinion — the state’s largest organization for realtors suggested that the Sadowski Housing Trust Fund receive at least a third of the settlement proceeds, in support of affordable housing efforts across Florida, including the State Housing Initiative Program (SHIP) and State Apartment Incentive Loan program (SAIL).
Interestingly, part of the argument advanced by Florida Realtors was that the Florida Legislature had taken money from the Sadowski Trust Fund for general revenue in the past, cutting housing programs – and now, the settlement monies could be used to fund existing housing programs that could help “to avoid preventable foreclosures” and “ameliorate the effects of the foreclosure crisis.”
According to the ProPublica investigation, already $33,000,000 of the Florida settlement funds have been diverted from the intended foreclosure assistance for which they were paid and put into the Florida general fund. Just like lots of other states are doing.
Larry Tolchinsky’s Tip:
Of course, there’s good news. So far, things aren’t as bad as Georgia and California where ProPublica reports ALL the settlement monies from the AG-Big Bank Foreclosure Fraud deal have gone into their state general fund. (California’s general legislature still has to approve it.)
However, one has to wonder when – and if – any Florida home owner victimized by the Florida Foreclosure Fraud crisis will be helped in any way by these settlement monies. This news has many people angry: read the comments at the Tampa Bay Times news coverage of the ProPublica report if you want to know their views. It’s likely that we’ll be reading more on the settlement money distribution and more people will be angry about how the money is being spent in the coming months.
Meanwhile, for those that have been hurt (and are continuing to be hurt – remember the underwater mortgages issue we addressed last week?), the answer most likely remains in their laps. Individuals will have to fight their own fights for justice: in loan modifications, in foreclosure defense, in appraisal fraud lawsuits, in fights against forced place insurance scams, and more.
What we’ve learned here: the executive branch isn’t the answer for most, and neither is the legislature. The judicial branch — the court system — remains the avenue for most Floridians who have been harmed in this real estate fiasco. It’s the Wild West out there, and that’s the reality of what we all have to deal with these days.
If you have questions or comments, please feel free to Chat with Larry in the comments below, at email@example.com or (954) 458-8655.