Pam Bondi: Mortgage Settlement Money Isn't for State Employee Pay Raises
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Attorney General Pam Bondi is adamant that a $334 million mortgage settlement sitting in escrow since February will go to distressed Florida homeowners, not to state employees for pay raises.
As part of the mortgage settlement finalized in April, 2012, the nation's five biggest banks agreed to pay $25 billion to 49 states and the District of Columbia. In addition, $2.5 billion was divvied up among all the attorneys general according to how large the states were and how hard they were hit by the crisis.
Florida has the highest percentage of inventoried foreclosure homes in the country -- 11 percent.
While Bondi continues to talk with legislators over the fate of the money, she believes an agreement -- which she claims doesn't need legislative approval -- will soon be hammered out.
“This money is to help consumers in the foreclosure crisis,” Bondi said on Tuesday.
“This money, that I signed the settlement agreement for, will not be used for pay raises if I have anything thing do to with it, which I do.”
Until Tuesday, Florida was one of just a few states where the attorney general had not announced plans for a significant portion of the money. ProPublica, an independent, non-profit newsroom that produces investigative journalism in the public interest, contacted every state to find out what they were doing with the money.
What Pro Publica's reporters discovered was that of the $2.5 billion, just over a billion dollars has been pledged for housing-related programs, while a roughly equal amount has been diverted to plug budget holes or fund programs unrelated to the foreclosure crisis.
Of the some $378 million still to be determined, almost all of that is Florida’s.
State Rep. Michelle Rehwinkle Vasilinda, D-Tallahassee, had proposed Monday that some of the money go to state employee pay raises.
“We have the lowest paid work force among the states. We have the leanest state work force among the 50 states, and that comes in a state that’s extremely complex," Vasilinda told WFSU.
Katie Betta, spokeswoman for Senate President-designate Don Gaetz, R-Niceville, maintains the settlement money, currently sitting in an escrow account, must be appropriated by the Legislature.
“As you know, there are certain guidelines for how the $300 million currently in escrow can be spent; however, other funds comprising the vast bulk of the settlement Florida received will go directly to homeowners facing foreclosure via debt write-offs, refinancing and other negotiations between homeowners and lenders,” Betta responded in an email on Tuesday.
“It is our understanding that there are also other programs with unspent federal funds, including the Florida Housing Finance Corps, which can provide relief for additional Floridians facing foreclosure.”
It was the state attorneys general, not state legislatures, that negotiated the settlement with the country’s five largest loan servicers: Ally/GMAC, Bank of America, Citi, JPMorgan Chase, and Wells Fargo.
According to the settlement, state and federal investigations found that the five loan servicers routinely signed foreclosure-related documents outside the presence of a notary public and without really knowing whether the facts they contained were correct.
Part of the settlement went to Florida borrowers who lost their homes to foreclosure between Jan. 1, 2008, and Dec. 31, 2011.
The settlement agreement, announced in February, lists permissible uses of the settlement funds, including housing counselors, state and local foreclosure assistance hotlines, state and local foreclosure mediation programs, legal assistance, housing remediation and anti-blight projects, and training and staffing of financial fraud or consumer protection enforcement efforts.
Nancy Smith contributed to this story.
Reach Jim Turner at email@example.com or at (772) 215-9889.