Deal on $300 million foreclosure settlement

November 2, 2012 | WTVT-TV Fox News, Tampa

TALLAHASSEE (AP) – After a months-long feud, Florida’s attorney general and the state Legislature reached a deal Friday intended to clear the way for more than $300 million in mortgage settlement money to finally start flowing to those affected by the foreclosure crisis.

The money is the state’s direct share of a massive $25 billion national settlement with five of the nation’s largest mortgage lenders.

Attorney General Pam Bondi relented to the idea that state legislators will get to vote on where the money winds up. The new deal also calls for $74 million to go straight into the state’s main account where lawmakers can use it anyway they want.

St. Petersburg Attorney Charles Gallagher, who sues banks, doesn’t think that’s right for Florida or any other state.

“I think that was a very opportunistic allocation of funds. I don’t think it was intended for any state to put this in a general fund,” Gallagher said.

Attorney General Bondi said in a joint statement with the two incoming leaders of the Legislature that it will grant “much-needed assistance” and “and ensures that the settlement funds are spent with the transparency, accountability and flexibility that comes from the legislative process.”

Florida received $334 million directly as part of the national settlement reached between lenders and 49 states. The settlement represents money that is in addition to roughly $7.5 billion anticipated to come directly to homeowners in Florida.

The settlement was announced back in February and the U.S. Department of Justice promised immediate relief to homeowners around the country, but it hasn’t turned out that way. Here in Florida, legislators for months had quietly insisted that the state constitution prevented Bondi from spending the money independently without legislative approval.

Instead, Bondi will ask a legislative budget panel to sign off on spending the first $60 million between now and the end of the year. That money will be used to help with down payment assistance; foreclosure related assistance as well as helping state courts deal with a foreclosure backlog.

Then another $200 million will be approved by the full Legislature when it convenes in March 2013. Bondi and legislative leaders said possible uses of these funds include foreclosure prevention, neighborhood revitalization, affordable housing, homebuyer or renter assistance, legal assistance, counseling and other housing-related programs.

Gallagher remains skeptical. I think there might not be that trickle-down effect in Florida where homeowners will get a benefit for this.

“Other states have already been spending settlement money on everything from demolishing vacant foreclosed homes to paying for mediation programs to help borrowers stay in their homes.

Some states, like California and now Florida, will use used some of the settlement money to plug budget gaps.

Material from the Associated Press contributed to this report.