Six Months After Settlement, Less Than Half of States’ $2.5B Slated for Housing
According to a new report, less than half of the $2.5 billion distributed directly to 49 states plus the District of Columbia as part of the National Mortgage Settlement will be used as the settlement intended. The report, the second on the subject released by Enterprise Community Partners, shows that most of the balance is diverted to states’ general funds.
The purpose of the settlement, reached between numerous financial institutions and the federal government and states’ attorneys general, is to help prevent foreclosures, stabilize communities and prosecute financial fraud.
Although 23 states will use all or substantially all of their settlement funds for housing-related activities, and another five have allocated more than 70% of their funds for housing, 14 are devoting less than half of their money toward housing and the rest are using all of their funds for non-housing purposes.
In New Jersey, Governor Christie directed settlement funds to the general budget indicating that they should support existing state housing programs this fiscal year. The state’s settlement language does not say who would determine how the money would be spent and allows for the $271 million to be used without limits. The Governor decided to put funds in the general budget although he says that the money will “deal with housing problems, homelessness issues and other affordable housing issues for people of the state.”
The settlement funds that become part of the state’s housing budget did not indicate the expansion of any new housing activities. Advocates do not expect the state to use the money on foreclosure prevention or neighborhood stabilization. The report concludes that New Jersey’s use of the money is not in compliance with the settlement.
Click here for the report that provides a brief, state-by-state description of the planned activities.
Click here for the National Mortgage Settlement website.
Click here for HUD’s Mortgage Servicing Settlement website.