New Enterprise Study, States Fall Short On Help For Housing, Shows More Than Half Of National Mortgage Settlement Funds Being Diverted
WASHINGTON, Oct. 18, 2012 /PRNewswire/ -- Enterprise Community Partners, Inc. (Enterprise) today released States Fall Short on Help for Housing: Six Months after Mortgage Settlement, Less than Half of States' $2.5 Billion Has Gone for Housing. The study explores how the states who were parties to the landmark National Mortgage Settlement have been allocating their designated funds and analyzes whether states have adhered to the intent of the settlement.
Announced in February 2012, the historic joint state-federal settlement among 49 state attorneys general, the federal government and the country's five largest mortgage servicers provides as much as $25 billion in relief to distressed borrowers and states. A total of $2.5 billion in direct payments to the states were supposed to help prevent foreclosures, stabilize communities and prevent or prosecute financial fraud. However, States Fall Short on Help for Housing reveals that less than half of the announced expenditures will be used as intended.
"Enterprise's States Fall Short on Help for Housing report shines a spotlight on the fact that the majority of National Mortgage Settlement funds, particularly in some of the hardest hit states, are not going to help prevent foreclosures, stabilize communities, and prevent or prosecute financial fraud as originally intended," said Terri Ludwig, president and CEO, Enterprise. "In some cases, there are still opportunities to ensure proper use of the funds which could be used to prevent foreclosures or help families and communities recover from the foreclosure crisis," added Andrew Jakabovics, senior director of Policy Development & Research at Enterprise and a co-author of the study.
Additional key findings of States Fall Short on Help for Housing include the following:
- States have so far announced plans to spend $977 million for housing and foreclosure-related activities
- $989 million has been diverted to states' general funds or for non-housing uses
- $588 million remains to be allocated
- While the majority of states plan to use most of their funds for housing-related activities the largest recipients including California, Florida and Texas are not currently doing so
- Six states have deviated completely from the agreed upon uses of the funds, allocating zero percent to housing, including Alabama, California, Georgia, Missouri, New Jersey and South Carolina
- Settlement funds have begun to flow as intended in a number of states including Ohio, Tennessee and Connecticut
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