EDITORIAL: Florida’s $300-million housing bounty

May 9, 2012 | Miami Herald

OUR OPINION: Sadowski fund should get bulk of the money

Advocates of affordable housing in Florida, listen up: You have a chance to weigh in on how the state uses $300 million to ease the pain of the foreclosure crisis, but you must act quickly.

The funds were part of a court-approved, $25-billion settlement that Attorney General Pam Bondi and 48 of her counterparts in other states managed to wrest from five of the nation’s greediest banks and mortgage servicers to clean up the robo-signing scandal that delivered grief to tens of thousands of homeowners across the country.

The settlement requires the banks to pay $20 billion in mortgage relief and $5 billion to state and federal governments. Most of that money goes directly to aid the banks’ victims, including refinancing loans that are greater than the homes are worth. Because Florida was ground zero in the predatory foreclosure crisis, the state received the lion’s share of the settlement, about $8 billion.

It sounds like a lot of money, but then the scope of the wrongdoing was immense. The amount includes $170 million for Floridians foreclosed on from 2008 to the end of 2011, according to Ms. Bondi, who expects the amount will cover 85,000 separate payments of about $2,000 each to Floridians. However, the number of foreclosure sales in Florida in the covered period stands at some 445,000. By some reliable estimates, Florida homes are underwater by more than $100 billion.

Nonetheless, Ms. Bondi and her counterparts deserve kudos for making the banks pay for their wrongdoing. In their eagerness to foreclose, bankers violated fundamental rules of mortgage servicing and routinely ignored procedures designed to protect the public from voracious lenders.

Now Ms. Bondi has had the good idea of asking Florida consumers to weigh in on the use of $300 million in “discretionary” funding that comes with the settlement. According to an online site her office has set up to deal with this topic, the money can be used for a variety of purposes, including housing counselors, foreclosure assistance hotlines, foreclosure mediation programs, legal assistance, and others.

Through 5 p.m. on Monday, May 14, the public can make suggestions to the Attorney General’s Office by submitting the form on the site, http://myfloridalegal.com/Contact.nsf/NationalForeclosureFeedback. .

The Sadowski Housing Trust Fund should be at the top of the list of worthy recipients.

Established by the Legislature in 1992, the fund gets its money from documentary tax fees and, over the years, has garnered roughly $4.6 billion. In the last few years, however, Tallahassee lawmakers have raided the fund and diverted $1.3 billion to general revenue. The cuts have been devastating, particularly in a state as hungry for affordable housing as Florida.

The Sadowski fund helps Floridians buy or fix up foreclosed homes that have been abandoned so they can be re-sold. It helps to build or rehabilitate apartments for affordable housing. Most of the money is distributed in block grants to counties to allow flexibility in how to target local housing needs.

The fund offers an existing program that needs no new bureaucracy. It works, and it gives local communities a say. Other permissible destinations for the money are worthwhile, including counseling and legal assistance. But turning abandoned, dilapidated housing into affordable and liveable homes is the best solution, and the best destination for the bulk of the state’s $300 million discretionary allotment.