Less than half of the states' $2.5 billion from the national mortgage servicing settlement is being used for housing initiatives as intended, according to a study released Thursday by ""Enterprise Community Partners, Inc."":http://www.EnterpriseCommunity.org, a nonprofit group that supports affordable housing programs and spearheads community revitalization projects.[IMAGE]
It's been just over six months since a ""federal judge approved"":http://dsnews.comarticles/historical-25b-settlement-approved-by-federal-judge-2012-04-06 the agreement reached between the nation's five largest mortgage servicers and officials from 49 states, the District of Columbia, and the U.S. government. Enterprise observed the six-month mark with a ""report on the states' allocation"":http://www.enterprisecommunity.com/servlet/servlet.FileDownload?file=00Pa000000Gb7uGEAR of their share of the funds.
The five servicersÃ¢â‚¬"-Ally/GMAC, Bank of America, Citi, JPMorgan Chase, and Wells Fargo--agreed to a $25 billion penalty as part of the settlement. Of that total, $2.5 billion was paid directly to the participating states (all but ""Oklahoma"":http://dsnews.comarticles/oklahoma-residents-first-to-receive-mortgage-servicing-settlement-payments-2012-10-18 signed on to the national settlement).[COLUMN_BREAK]
These direct payments were intended to help prevent foreclosures, stabilize communities, and prevent and prosecute financial fraud.
To date, states have announced plans to spend $966 million of the settlement money on housing- and foreclosure-related activities, according to Enterprise's study. The nonprofit group found state governments have diverted $988 million, funneling the money instead to their own general funds or toward non-housing ventures.
There's still $588 million that has not yet been allocated for specific uses; Texas and Florida hold the lion's share of outstanding, non-designated funds.
While the majority of states plan to use most of their funds for housing-related activities, Enterprise says it's the largest recipients--including California, Florida, and Texas--that are not currently addressing their local housing issues with the settlement money.
Enterprise found six states have deviated completely from the agreed upon uses of the funds, allocating zero percent to housing: Alabama, California, Georgia, Missouri, New Jersey, and South Carolina.
In a number of states like Ohio, Tennessee, and Connecticut, Enterprise says settlement funds have begun to flow as intended.
Terri Ludwig, president and CEO of Enterprise, says her organizationÃ¢â‚¬â„¢s study spotlights the fact that the majority of the settlement funds, particularly in some of the hardest hit states, are not being put to use as planned.