Given Tallahasee’s chronic budget shortfalls and lawmakers’ love of found money, it’s no wonder some of them are casting covetous eyes on the $334 million pot of gold that Florida received as its share of a $25 billion settlement with mortgage banks.
What a perfectly horrible idea.
Let’s back up for a minute. Florida’s overall share of the national settlement obtained by Attorney General Pam Bondi and 48 of her counterparts in other states came to roughly $8.4 billion. But most of that, roughly $7.6 billion, is earmarked for direct compensation to homeowners for mortgage servicing and foreclosure abuse. The states have no hands-on role in that disbursement, other than to monitor the process and recommend changes if they don’t like what they see.
Of the $25 billion, however, $5 billion was set aside in a separate fund for the states to use for specific purposes spelled out in the settlement. Florida’s share came to $334 million. The language clearly states that “the attorney general shall (emphasis added) designate the uses of the funds,” offering no wiggle room or vague wording that would allow a stampede for the money by competing political interests.
That hasn’t stopped ambitious legislators from making a run at it, naturally. “I do think it has to be authorized by the Legislature,” said Sen. JD Alexander, R-Lake Wales and the Senate budget chief.
Attorney General Bondi disagrees. Given that she played a crucial role in the settlement, she knows what she’s talking about.
She and the other attorneys general who hammered out the settlement apparently foresaw the potential for misuse of the funds and inserted language that left no doubt about the funds’ proper use.
The settlement states that permissible purposes include, but are not limited to, “supplementing the amounts paid to state homeowners under the Borrower Payment Fund, funding for housing counselors, state and local foreclosure assistance hotlines, state and local foreclosure mediation programs, legal assistance, housing remediation and anti-blight projects, funding for training and staffing of financial fraud or consumer protection enforcement efforts, and civil penalties.”
That hasn’t stopped lawmakers in some states from diverting the funds anyway. In Arizona, for example, $50 million went to other purposes because lawmakers blithely declared that helping victims of mortgage or foreclosure abuse was not a critical priority.
That mustn’t happen in Florida. The money is clearly and unmistakeably designated for victims of the housing collapse.
We have already suggested that some of this money should go to bolster the Sadowski Housing Trust Fund, which has repeatedly been raided by legislators for general revenue instead of being used for its intended purpose.
That includes helping Floridians buy or fix up foreclosed homes that have been abandoned so they can be re-sold and to help build or rehabilitate apartments for affordable housing.
There are other, equally useful purposes outlined in the settlement that are also worth considering, providing the process is transparent and has public input.
Attorney General Bondi should hold fast to her position that the money from the mortgage settlement can be used without legislative permission. The language of the settlement is clear and the intended uses of the money are equally clear.
Once the door is opened for legislative approval, can a raid on the funds by lawmakers be far behind?