When a states budget looms on a precipice of disaster where does a governor turn to? Foreclosure relief funds originally destined for needy homeowners. That’s right. Remember the $26 Billion bank foreclosure settlement a few weeks ago, well about half of the states, including here in California, have used the funds to fill in mammoth holes in the state budget.
California, which received more than $400 million from the banks, and Gov. Jerry Brown has proposed using the lion’s share of that sum to pay the state’s debts.
As part of the settlement, the banks agreed to pay the states $2.5 billion, money intended to help homeowners and mitigate the effects of the foreclosure crises. But a closer look at the settlement reveals that this lesser amount represents the only cash the banks were forced to pay — the remaining amount comes via “credits” that the banks will use to reduce mortgage debt and other activities. With the state deficit spiraling out of control, the California governor can’t resist dipping into the $400 million.
We wonder what our AG Kamala Harris will have to say about this diverting of homeowner funds that she worked to negotiate.
Be sure to tune in for the next round of protests as distressed homeowners once again get the shaft.