Given the loose guidance of the settlement, states have the authority to choose where the funds will be used and many are using the funds to fill budget gaps. Twenty-seven states have agreed to use the funds specifically for housing. For example, of the over $12 million awarded to Arkansas, $9 million will go to down-payment assistance programs, foreclosure counseling and financial literacy programs with the remaining going to legal aid and fees associated with the settlement. Arizona’s over $97 million will also be used for state foreclosure prevention programs. A majority of the over $92 million awarded to Ohio will be used for demolition of abandoned and vacant properties with smaller awards to non-profits and local governments to fund innovative programs to help struggling homeowners and to the attorney general to prosecute foreclosure relief scammers.
While some states understand that homeowners need relief, other states plan to divert settlement funds into general funds or debt repayment. California, one of the hardest hit by the foreclosure crisis, received over $410 million in the settlement and plans to use the funds to pay debts. Texas, Missouri, Georgia, Indiana and Virginia took a similar route in determining the funds were not needed in housing relief.
Andy Schneggenburger, the executive director of the Atlanta Housing Association of Neighborhood-Based Developers, said Georgia governor Nathan Deal’s decision to use the $99 million in funds to bring companies into the state instead of homeowner relief shows “a real lack of comprehension of the depths of the foreclosure problem.” Read the New York Times and NPR for more information.