Homeowners rankled by foreclosure money going to developers

The Palm Beach PostMarch 28, 2013 

Struggling Florida homeowners and consumer advocates are questioning how plans by state lawmakers to spend $200 million in bank foreclosure reparations will stave off foreclosures.

The plans, which in the Florida House's version include paying for college dorm rooms, domestic abuse shelters and mortgage down payments for assistant state attorneys, are being pitched as ways to spend part of the state's take from the National Mortgage Settlement. The settlement was negotiated last year with the country's five largest banks to atone for foreclosure- and mortgage-related wrongdoing.

Florida lawmakers snagged the $200 million with a promise it would be used for "housing-related purposes."

But critics of the proposals say the beneficiaries may be good causes, but not who the settlement money was intended to help: homeowners facing foreclosure.

"It's baffling to me how we are using these dollars," said Rep. Mike Fasano, a New Port Richey Republican about the House's proposal. Fasano unsuccessfully tried to amend the plan before it was unanimously approved by House Appropriations Committee last week.

"These are good and reputable programs but those dollars are to be used to keep people in their homes," he said.

The House bill, HB 7111, would dedicate $15 million to pay college dormitory costs for current high school sophomores and juniors. About $45 million would go to mortgage down payments for teachers in low-performing schools, rural health care workers, including doctors, assistant state attorneys, public defenders, veterans and active military. Developers who build low-income housing would share in $50 million, and the

Department of Children and Families would receive $20 million to provide more bed space for victims of domestic abuse.

The Senate's version, first discussed today, gives $65 million to low-income housing developers, $35 million to the courts, $10 million to legal aid programs, $10 million to purchase and renovate homes for low income families and the homeless, and $70 million to the State Housing Initiatives Partnership, or SHIP.

No money for SHIP is in the House's budget. The long-standing housing fund helps very low- to moderate-income residents pay for emergency repairs, closing costs and home ownership counseling.

House Appropriations Chairman Seth McKeel, R-Lakeland, said the National Mortgage Settlement money can be used for more than just foreclosure-rescue programs and he wanted to propose new ideas to address the housing crisis and other state issues.

"I thought about our state's policy areas and how housing solutions could be a part of solutions to other problems as well," he said. "This bill is the result of that thinking."

Some of the recipients in the House's plan, including Habitat for Humanity and legal aid providers can directly help homeowners facing foreclosure, but the state courts would also get $25 million to hasten the foreclosure process for the 366,250 Florida homes in the system. Another 680,000 foreclosures are expected to be filed in Florida over the next three years, according to estimates by the state courts administrator.

Laura Johns, a community organizer with the Home Defenders League in Orlando, said she was "a little bit speechless" after reading the House proposal and would have liked to see some money dedicated to principal reductions or to help supplement mortgage payments.

"The victims of the foreclosure crisis remain uncompensated," Johns said. "It does speed up the foreclosure process, but doesn't help the people in it."

The House's bill is sponsored by its Appropriations Committee and Rep. Ed Hooper, R-Clearwater. The Senate's version is sponsored by its Appropriations Subcommittee on Transportation, Tourism, and Economic Development.

"Our proposal appropriately prioritizes available funding for those most in need of housing assistance: person with disabilities, homeless individuals and families, low income seniors and other extremely low income Floridians who can best utilize affordable housing options," said Senate committee Chairman Andy Gardiner, R-Orlando.

Hooper said last week that while there are areas of the House bill that could be tweaked, there is still a "tremendous amount of good in it."

According to a staff analysis of the House's bill, state attorney and public defender offices statewide experience a 15 percent turnover rate, leaving half of all assistant state attorneys with less than five years of experience. The attorneys carry, on average, between $80,000 and $100,000 worth of student loan debt, but have starting salaries of between $40,000 and $50,000.

Providing $10,000 for a down payment will help retain those attorneys, bill supporters say. The same is true for teachers in low-performing schools and rural health care workers.

Florida Attorney General Pam Bondi supports both plans.

"You have a lot of great ideas in your bill and you are right on target with where that money should go and where it's meant to go," she told a House committee last week.

Florida's total share of the National Mortgage Settlement is $8.4 billion, which includes mortgage principal reductions, short sale approvals, and debt forgiveness awarded by banks.

Port St. Lucie homeowner John Moore is underwater in his mortgage and has written letters to the attorney general asking why the settlement dollars under state control aren't being used to help current borrowers.

His concern is that he will lose his home, which he said he's invested $90,000 in, while other individuals are being given money to buy it.

"How does housing counseling, legal aid and better funded courts help the existing Florida homeowners whose homes are underwater?" Moore asked.

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