Group wants foreclosure fraud settlement money for affordable housing programs

May 8, 2012 | Florida Current

Gray Rohrer

Lawmakers again swept document stamp tax funds this year that were supposed to go toward affordable housing programs, but a multi-state foreclosure fraud settlement has given groups supporting those programs new hope.

Florida will receive $8 billion as part of a $25 billion multi-state settlement with five of the nations’ largest banks: Bank of America, JP Morgan Chase, Wells Fargo, Citigroup and Ally Financial. The vast majority of those funds will go toward principle reduction on mortgages, cash payments for victims of suspicious foreclosure practices and refinancing for underwater homeowners. But the state also will get $300 million in discretionary funds to spend on housing.

LobbyTools subscribers: Access the dollar allocations each state will receive in discretionary funds as part of the multi-state foreclosure fraud settlement.

Members of the Sadowski Coalition, an association of business groups and charities for the poor and elderly dedicated to securing funding for affordable housing, met with staffers for Attorney General Pam Bondi last month, urging them to spend at least $100 million on affordable housing programs like the State Housing Initiative Program (SHIP) and State Apartment Incentive Loan program.

“Putting a portion of that money into the SHIP program would be an effective and expedient way to stabilize the housing market,” Sadowski Coalition facilitator Jaime Ross said.

That $100 million is a little more than the $98 million in document stamp funds — a tax on real estate transactions and other legal documents — that were swept from the affordable housing trust fund by the Legislature this year – a common practice for lawmakers even before the recent recession led to budget shortfalls. The money from the foreclosures settlement represents a second chance for the affordable housing programs to receive funding.

But Ross will have competition for the money. Bondi’s office put out a news release last week asking for public input on how to spend the discretionary settlement money, and so far has received more than 1,000 comments. The period for public comment ends Monday.

Unlike other states that have spent settlement funds to fill budget holes and special projects, Bondi’s office says there are parameters on how this money will be spent: It will only go to aid the housing market in Florida that was ravaged by rampant foreclosures resulting from the burst of the housing bubble in 2008.

And that could include spending on beefing up law enforcement capabilities to fight foreclosure fraud, housing counseling, legal assistance, anti-blight programs and foreclosure mediation and assistance hotlines.

“Anything that’s housing-related,” Bondi spokeswoman Jenn Meale said. “Any type of program that would ameliorate the foreclosure crisis.”

Reporter Gray Rohrer can be reached at grohrer@thefloridacurrent.com.