Foreclosure relief funds diverted by states
| May 24, 2012
If you were counting on the government’s big foreclosure relief settlement to help ease the housing crisis in this country, don’t hold your breath.
A report out today from ProPublica today shows that nearly forty percent of those funds are being used by the states for non-housing related needs.
In the settlement the states’ attorney generals and the federal government ganged up on the banks and squeezed them for a cool $2.5 billion in penalties for various mortgage related trickeration. But like the big tobacco settlement of the 1990s (in which almost none of the money went to cancer victims), the states are now using their shakedown money to pay other bills.
Some states are using the money for what it was honestly intended to do. But California is using it’s share to pay down the state’s budget deficit, and Georgia is using it’s $99 million to attract new business. Missouri will use most of it’s $39 million to fund higher education.
At the link you can find an interactive map that details what your state is doing with the windfall.