Mortgage Fraud: Suggest Settlement Ideas

May 10, 2012 | Lakeland Ledger Editorial

Floridians now have an easy way to suggest constructive ways for their state to spend millions of dollars from the proceeds of a mortgage-fraud settlement. Florida was among the states that joined the federal government to sue the nation’s five largest mortgage servicers, alleging foreclosure abuses and unacceptable nationwide mortgage-servicing practices. Florida’s share of the $25 billion settlement is $8.4 billion.

Most of the state’s settlement — $7.6 billion — is earmarked to provide borrowers with loan modifications, including principal reduction, and other direct relief.

The settlement agreement also provides about $334 million for Attorney General Pam Bondi to administer. That money is supposed to help avoid preventable foreclosures, ameliorate the effects of the foreclosure crisis and to enhance law-enforcement efforts against financial fraud.

There is no shortage of useful ideas for spending this money. U.S. Rep. Kathy Castor, D-Tampa, has proposed funding for:

Counselors certified by the U.S. Department of Housing and Urban Development. Those counselors help homeowners learn how to restructure or pay off debts, so they can make their house payments — or advise them on the best ways of handling their financial crises.

Florida’s ‘Hardest Hit’ initiative. This program provides direct aid to unemployed or underemployed Floridians, so they can stave off foreclosure.

This week, the Sadowski Housing Coalition, a nonpartisan group of 24 statewide organizations, proposed that settlement funds be directed toward:

The State Housing Initiative Program and the State Apartment Incentive Loan Program.

SHIP can be used for down payment assistance and the rehabilitation of foreclosed homes. SAIL finances the construction or rehabilitation of affordable rental units and can be used to support HUD-certified housing counseling agencies.

All of these ideas are sensible. A better destination would be Florida’s legal-aid organizations.

These nonprofit entities help Floridians who cannot afford to hire a lawyer to defend themselves in civil matters, such as foreclosures, debt collections and family-law cases.

Floridians with other good ideas may make suggestions online: http://myfloridalegal.com/Contact.nsf/NationalForeclosureFeedback Deadline May 15.

Bondi should give the best proposals her support.