Maine Becomes Third State to Divert Foreclosure Settlement Funds Away from Homeowners

Following Scott Walker in Wisconsin and Jay Nixon in Missouri, the state of Maine will be using money from the foreclosure fraud settlement not to help suffering homeowners, but instead to pump up the state's general fund--patching budget holes blown by those states' right-wing governors. 

Dave Dayen at FireDogLake notes: 


There’s nothing illegal about this; the new executive summary posted at the National Mortgage Settlement site says this about payments to the states:

Payments to the States
The remaining settlement funds, approximately $2.5 billion, will be paid to the participating states. The funds may be distributed by the attorneys general to foreclosure relief and housing programs, including housing counseling, legal assistance, foreclosure prevention hotlines, foreclosure mediation, and community blight remediation. A portion of the funds may also be designated as civil penalties for the banks robo-signing misconduct.

That’s essentially a license for states to take the money as a “penalty” and put it into their general funds. Three out of 50 have already done so. We’ll continue to track who else will engage in this, and clearly there will be more. You honestly think Rick Scott or Rick Perry won’t use this money to plug their budget holes?

 Walker was the first one, unsurprisingly, to announce that his budget would be saved by the foreclosure settlement (should we at least be grateful that he's not trying to slash more out of his state employees' pockets?) but the speed with which his move was imitated definitely lends credence to Dayen's point.

The foreclosure settlement isn't just meant to be a "penalty" for the banks' criminal behavior--it's far too small to do justice to that idea. It's meant to provide support for those struggling with the housing crisis, in danger of losing their homes. As Travis Waldron at ThinkProgress noted, these states have other places they could generate revenue "without taking money from programs meant to help struggling homeowners." 


AlterNet / By Sarah Jaffe | Sourced from

Posted at February 13, 2012, 10:31am

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