Politics

AG, Lawmakers Reach Accord on Foreclosure Settlement

By: Michael Peltier News Service of Florida | Posted: November 3, 2012 3:55 AM

Pam Bondi

Attorney General Pam Bondi | Credit: pambondi.com

Florida Attorney General Pam Bondi and legislative leaders said Friday they reached accord over how $300 million recovered from mortgage lenders and servicers as part of a national foreclosure settlement will be spent.

The Legislature and Bondi's office have been at odds for months over who had the authority to spend the money, part of $8 billion in relief promised Florida under the $25 billion national settlement announced in February.

Bondi said the settlement agreement gave her office the power to distribute the funds while House and Senate leaders were equally adamant that it is the Legislature's constitutional responsibility to appropriate money. The deal is a compromise that allows Bondi to direct some of the spending with lawmakers' approval, while leaving some of the money to the Legislature to spend.

Bondi said as part of the agreement she would seek legislative approval in the coming weeks to spend $60 million of the proceeds for down payment assistance, foreclosure-related legal assistance and education programs and efforts to ease the backlog of cases now clogging the civil courts across the states.

The remaining $240 million will be dispersed through the regular legislative appropriations process, with an agreement that $200 million be earmarked "for housing-related purposes, consistent with the terms of the settlement agreement."

The remaining $40 million will be placed in general revenue, adding to $34 million in civil penalties already placed there.

"This plan gets much-needed assistance to the homeowners and communities suffering the effects of the foreclosure crisis, and ensures that the settlement funds are spent with the transparency, accountability and flexibility that come from the legislative process,” Bondi said in a statement Friday.

Florida, 49 other states and the federal government worked out the $25 billion national settlement with the five largest mortgage servicers, which were accused of unscrupulous handling of mortgages in foreclosure between 2008 and 2011.

Lenders GMAC Mortgage, Bank of America, Citi, JP Morgan Chase and Wells Fargo were cited for a series of unlawful practices, including "robo-signing" in which documents were signed by lending officials without attempts to validate the information.

Florida's share of the settlement is expected to be $8 billion. Most of the money will go from lenders directly to homeowners through loan modifications, including reducing principal loan balances and forgiving amounts in forbearance.

The settlement also provides refinancing options for qualified homeowners current on their mortgages but whose loan amounts are greater than the value of their homes.

Incoming Senate President Don Gaetz, R-Niceville, and incoming House Speaker Will Weatherford, R-Wesley Chapel, signed off on the deal and will recommend to the Joint Legislative Budget Commission that Bondi be authorized to direct the spending of $60 million.

"The framework that has been outlined today will enable the Legislature to fulfill its important duty as appropriators while also directing these funds to those who have been negatively impacted," Weatherford said in a statement.

Affordable housing advocates have applauded the agreement, which restricts the bulk of settlement proceeds to housing issues. Other states have used their settlement proceeds to patch nonhousing holes in their respective budgets.

But advocates urged lawmakers not to use the windfall as a substitute for state money earmarked for affordable housing through the Sadowski Trust Fund, which is expected to generate about $175 million for the upcoming fiscal year.

"We will be looking to see that this money is not used to supplant future Sadowski funding," said Jaimie Ross, director of affordable housing for 1,000 Friends of Florida. "… It would not be a good outcome for the settlement money to be used for other affordable housing programs.


Tags: News, Politics

Comments (1)

Evelyn Rusciolelli
1:59PM NOV 4TH 2012
This is why I voted democrate last week. You raid the trust funds, cut the historical Affirican American early voting day and now don't allow the funds to be earmarked for housing. If the housing trust funds are any reflection of what you are made of, then that will be the result - pet projects for your wealthy friends.

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