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Foreclosure Settlement Fund Diversions are a Scandal except in Ohio

New Orleans   It is hard for me to believe that the Obama Administration will not finally address relief for the millions of homeowners facing foreclosure and are underwater across the country.  The slightly improving market for housing should help trigger some change, though many banks will no doubt continue kicking and dragging.  The relief will have to be direct though or the recent experience in most of the states on the distribution of the $2.5 billion in foreclosure settlement funds indicates that in the absence of strong community organizing around the issue, the states will simply divert the funds every which way.

Looking at a chart compiled by the Wall Street Journal several weeks ago, the track record is simply depressing compared to the states where the most dollars were distributed.  California got the lion’s share of the monies and shockingly diverted 100% of the dollars away from any housing relief and into the gaping hole of their general fund.  They weren’t alone.  Georgia and New Jersey did exactly the same thing.   All of this as pointed out by the Journal reporter, Nick Timiraos, was despite the fact that the settlement agreement clearly stated that the money was designated for housing relief:  “to the extent practicable…for purposes intended to avoid foreclosures….”

Other states were more mixed and in some cases there is still an opportunity for beleaguered victims of the housing crises because the states haven’t decided yet:

  • New York used most for housing and about one-third is still not allocated.
  • Florida used about 15% for the general fund and has not allocated about 85%.
  • Texas has not allocated any money so there is an opportunity there.
  • Illinois put about 20% into housing relief and has decided the rest.
  • Arizona split the pickle and put 50% in the general fund and 50% into housing.
  • Michigan did relatively well and put about 90% into housing relief and 10% into the general fund.

The only state that did the 100% right thing was Ohio!   A clue to what might make a difference in gearing up to fight for the rest of the foreclosure money that is undecided can be found in the critical organizing and role of the community organizations that make up the Ohio Organizing Collaborative, that made the use of this money for foreclosure relief one of their signature campaigns.

Thanks to their work, victims of the housing relief in that state have something to show for the future.  Maybe if community organizations involved with the housing issue in Florida, Texas, and Illinois move this fight up higher on their list, there’s a chance all of the money won’t go all California and end up in a budget rat hole somewhere?