News about the Foreclosure Settlement Funds in Florida
In Print: Monday, May 28, 2012
Florida grabs a chunk of foreclosure settlement money for state budget
By Toluse Olorunnipa, Times/Herald Tallahassee Bureau
TALLAHASSEE — Out of $334 million in cash payments sent to Florida in a multibillion dollar mortgage settlement with major banks, more than $33 million will help bolster the state’s budget.
Florida is one of several states taking a portion of the $2.5 billion in cash payments from big banks and using it for programs not directly related to the foreclosure crisis, according to ProPublica, a nonprofit investigative journalism organization.
A spokeswoman for Attorney General Pam Bondi — who negotiated the settlement on Florida’s behalf — confirmed that 10 percent of the cash has been sent to the general budget fund.
Florida’s total take in the $25 billion national settlement — which includes principal writedowns and mortgage modifications — is worth about $8.4 billion.
About $334 million of that came in the form of a cash payment to the state, and the attorney general’s office has maintained that most of the money will be used to directly help homeowners.
Settlement documents indicate that Bondi negotiated the 10 percent civil penalty, resulting in a $33.4 million cash payment to the general fund.
For now, Florida is only using 10 percent of the cash payment to bolster its general budget, but some other states are using all or a majority of their funds to plug large budget holes, according to a chart created by ProPublica. A few states have clauses similar to Florida’s, directing 10 percent of the money to general revenue as a penalty.
Still, some states have decided to use all of the funds for homeowners, citing that they were the main victims in the robo-signing scandal.
The remaining $300 million in Florida’s settlement cash has not yet been allocated. Bondi asked members of the public for suggestions on how to spend the money this month and has stated that it would be used to provide direct relief help for homeowners. Housing groups have advocated for the money to be used for legal aid for homeowners and low-income housing programs.
Georgia directed all of its $99 million to programs designed to attract new businesses.
A spokesman for Georgia Gov. Nathan Deal told ProPublica: “He believes that the best way to prevent foreclosures amongst honest homeowners who have experienced hard times is to create jobs here in our state.”