$25 Billion Foreclosure Settlement Goes To State Coffers Rather Than Troubled Homeowners

October 21, 2012
By Lonely Conservative


Do you remember that $25 billion settlement against banks that was supposed to help troubled homeowners avoid foreclosure? Well, it didn’t do much for homeowners, but it did help states with bloated budgets.

Researchers Andrew Jakabovics and William McHale took months to contact the AGs and plow through public documents and news clips because there is no central clearinghouse to track where all the money’s gone. They found that $966 million was pledged to “housing and foreclosure-related activities,” $588 million hasn’t been allocated at all, and “$988 million has been diverted to states’ general funds or for non-housing uses.” That is, to fill budget holes.

Governor Jerry Brown put California’s $410 million settlement share toward its $16 billion budget deficit. Arizona wants to do the same with $50 million of its share. Georgia is spending its $99 million on economic development.

Iowa AG Tom Miller, another settlement champion, told U.S. News & World Report, “It’s not like they’re [the states] taking a huge percentage of the overall settlement,” though he acknowledges states should spend “a significant part of [the funds] to help deal with and fund the infrastructure to help homeowners in crisis.” Note the “significant.” (Read More)
What is the one thing most states have in common when it comes to budget problems? Unions – that’s what I think. So it sounds to me like this was another gift to unions, only this time the banks paid for it. Either way, it’s the consumers that are hurt in the end, whether it’s the federal government giving the money away, or forcing banks to make bad loans and then suing the banks for foreclosing on those loans, we’re the ones who take it on the chin.

$25 Billion Foreclosure Settlement Goes To State Coffers Rather Than Troubled Homeowners | The Lonely Conservative