A couple days ago, Pro Publica basically took information compiled by housing groups and packaged in the New York Times on the raids by the states of hard-dollar funds from the foreclosure fraud settlement and did a deeper analysis. They now show that the raids have reached nearly $1 billion, out of a $2.5 billion commitment. This pencils out to about 40% of the funds going to fill budget holes rather than help homeowners. And as I’ve noted, even some of the “housing” purposes being funded with the settlement money are dubious – I don’t think giving free lodging to police officers in North Dakota’s boom areas constitutes the kind of help to homeowners that the settlement envisioned, to use but one example.

These are preliminary numbers, by the way. Only ten states have thus far finalized the process for dealing with the settlement funds; most of the rest will do so by the end of the fiscal year, which for the bulk of states is June 30. So this has the potential to get better or worse, though my money’s on the latter. The state-by-state breakdown from Pro Publica is here, Over $1 billion is unallocated, according to Pro Publica’s numbers. And even those allocations could change if a movement to divert the funds back toward homeowners succeeds, or legislatures shift the money back into the General Funds. So a lot’s in flux here. But from the Pro Publica analysis, you can see that, just based on the current tally, of the money that has actually been earmarked for allocation, about 63% has gone into general funds rather than toward help for homeowners or investigations into financial fraud.

The report broke some news, that Florida has admitted to diverting a chunk of their funds into the state’s coffers.

Out of $334 million in cash payments sent to Florida in a multi-billion dollar mortgage settlement with major banks, about $33.4 million will go to help bolster the state’s budget [...]

A spokeswoman for Attorney General Pam Bondi—who negotiated the settlement– confirmed that 10 percent of the cash has been sent to the general fund.

“Ten percent went to the state of Florida as a penalty,” she said. “That money goes to GR (general revenue).”

Florida’s total take in the overall $25 billion settlement—which includes principle writedowns and mortgage modifications–is worth about $8.4 billion.

Meanwhile, the defenders of this raid on homeowners have decided to come out of the woodwork. In California, the state’s Legislative Analyst, basically the equivalent of the head of the CBO, strongly supported Jerry Brown’s raid on settlement funds, saying not only that it “makes sense” but that more should be pulled forward in the first year (Brown only uses $292 million out of $410 in the first year, reserving the rest for a raid in the next fiscal year). I assume the Legislative Analyst has a nice home and he’s not underwater on his mortgage.

Then there’s the claim that states are filling budget holes that otherwise would lead to cuts that would devastate the same communities that have these housing problems. I don’t even know how you would begin to prove that assertion, but I know this. Banks broke the law by abusing borrowers and committing fraud in state courts. They didn’t pay a penalty so corporate tax cuts could be maintained, or enterprise funds could be created to bring in jobs, or education budgets could be propped up (all of which are examples of where settlement money is going). There’s a very real and direct through-line between the penalty, which by the way is completely insufficient, and the intended beneficiaries. And that has been severed. As a consequence, homeowners fighting still-illegal practices by lenders in court will not be able to afford representation. Homeowners fighting still-abusive servicers will not get legal help or counseling to stay in their homes. These aren’t minor side effects. We’re talking about the fundamental human need for shelter.