Snags In The Mortgage Settlement Funds

The $25 billion mortgage settlement deal was designed to help states fund vital foreclosure help services, improving lending conditions and offer homeowners affected by the foreclosure crisis obtain restitution. Now just a few months into the fund divisions, a review of the transactions is showing that there are some holdups in the system.

Slow States

Some of the states who received funds from the National Mortgage Settlement have been found to be exceptionally slow at managing funds, while others are using funds for unintended purposes. A nonprofit housing organization recently released a report stating that they found some of the states are not performing as expected. One such state is Florida, one of the largest hit by the mortgage debt and foreclosure crisis.

$2.5 billion of the original $25 billion was earmarked for direct payments to states for use in preventing foreclosures, stabilizing communities and policing lending fraud. As of October, only $966 million had been used for such purposes; leaving $988 million diverted in state general funds that were not earmarked for housing purposes and another $588 million unallocated.

One of the biggest holdups in Florida appears to be that the funds were paused in escrow pending the conclusion of the dispute between Florida Attorney General, Pam Bondi, and the state legislature. A recent agreement was reached between the two parties and near 80% of the remaining portion of the funds is now divided among various housing and mortgage debt related sources for the coming year.