When last I looked in on it, I counted $80.35 million in foreclosure fraud settlement funds earmarked for the states actually headed to purposes other than helping homeowners, its ostensible aim. This includes portions from Missouri, Wisconsin, Maine, Maryland and Vermont. Now we can probably add Georgia to the mix.
State legislators and Gov. Nathan Deal will spend $104 million of the $815 million banks are paying Georgia to settle foreclosure fraud claims, but if past indications hold true, much of that money won’t be going to distressed homeowners.
The discretionary cash will likely be spent on other areas of the state budget, as is money from Georgia’s settlement with tobacco companies and millions of dollars in directed fees that Georgians pay yearly [...]
“The state constitution requires that the money go into the state treasury. The governor would prefer that it go from there to the rainy day fund,” said Robinson said.
The rainy day fund is state savings to cover emergencies and hard times. It helps Georgia keep its high bond rating, which saves the state tens of millions of dollars in interest on loans. Legislators used the fund during the recession, shrinking it from $1.5 billion in 2008 to $116 million last year. Under Deal, it has risen back to about $320 million.
The $104 million represents the entire hard payout to the states, to be clear: the $815 million listed at the top includes the consumer relief elements of the settlement, like principal reductions, short sales and refinancings. Georgia Attorney General Sam Olens, through a spokesman, basically shrugged that his hands were tied and Georgia law requires appropriators to deal with a windfall of this type.
It’s true that nothing in the foreclosure fraud settlement documents mandates that funds paid to the states by the banks have to go toward housing measures. So it’s a fair bet that all $104 million to Georgia will get re-routed to a separate purpose.
So let’s look on the tote board. We now have $184.35 million of the settlement going not to housing relief programs, but to fill state budget gaps. That’s out of $2.75 billion headed to the states, or over 6% of the total. And we’ve only confirmed a relative handful of states.