Landmark Mortgage Servicing Settlement Funds Not Going to Housing Intentions

Despite a multi-billion-dollar windfall seen by the federal government and nearly all 50 states as the result of the landmark mortgage servicing settlement in early 2012, the funds are not sufficiently supporting state housing programs as initially intended, a recent report finds. 

Funds resulting from a settlement totaling more than $25 billion were intended to go in part to prevent foreclosures, stabilize communities and prevent and prosecute financial fraud. However, those initiatives are not being met fully, according to Enterprise Community Partners. 

“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,” the report states. 

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Instead, the vast majority of funds are going to states’ general funds. The report outlines spending by state indicating that some states are using their funds for housing, while others, such as California, have designated nearly all of the funds as civil penalties and to service the state’s housing debt. 

A near $1 billion for the Federal Housing Administration greatly reduced the likelihood the agency would need a federal bailout, its leadership announced in February. 

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Written by Elizabeth Ecker

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  • Governor Brown (D-CA) has never shown any qualms about raiding any monies placed in the trust of our state to pay for his inability to balance the budget.  California felons who were convicted of violating trust fund conversion laws wish they had the immunity to prosecution the Governor has in misappropriating funds placed in the trust of the state.

    Like others who commit such conversions, the Governor most likely believes he INTENDS on returning those “borrowed” funds in better times when the state will have surpluses “in the not to distant future especially with the help of these funds.”  

    Some believe “good intentions” should excuse bad actions but if that were the case, we would need no laws, no courts, no juries, no judges, no prosecutors, no police, no military, no wars, etc. because there are but a few legal violators and criminals who do not believe their actions were somehow in someway with the best of intentions and more than justified at the time they acted.

    If anyone is wondering why California is in the fiscal mess it is, just look to its Governor who represents the views of the majority in our legislative bodies.   

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