AFTER a California court found that the state was misappropriating funds from a past settlement with a housing counseling organization, state Republicans are urging Gov. Gavin Newsom to restore the funds to the state’s mortgage fund.
As previously reported by the Asian Journal, the California Supreme Court on Thursday, July 18 sided with the National Asian American Coalition (NAAC) and ordered the state to restore funds from a 2012 settlement — $311 million in total — to the National Mortgage Special Deposit Fund.
The National Mortgage Special Deposit Fund was established to fund housing resources for homeowners who are financially struggling. This fund provides, among many things, counseling, legal assistance and fraud prevention services.
On Monday, July 22, Republican lawmakers sent a letter to the governor urging him to release details on how the settlement money has been spent and ordered it be moved to the mortgage fund per its original intent. In 2012, then-Governor Jerry Brown had illegally diverted the funds to balance the state’s budget that year and to pay off state debts.
“The court’s decision is unambiguous. The state must return this money to the mortgage fund so it can be used on behalf of distressed homeowners,” California Republicans wrote in their letter. “Many homeowners are struggling in an economy that has seen inconsistent growth and still feel the effects of the recent recession and downturn in the housing market. This funding will allow thousands of homeowners statewide to stay in their homes by preventing unnecessary foreclosures.”
The state gained the $311 million as a result of a 2012 settlement with the five largest banks in the nation which committed fraudulent lending practices. This lead to millions of homeowners losing their homes because of mortgage delinquencies and foreclosures.
Along with co-plaintiffs, the NAAC sued Brown and state finance officials in 2014 in order to return the funds to the National Mortgage Special Deposit Fund.
“The state’s highest court has weighed in and agreed that the governor needs to return the $331 million originally allocated to help struggling homeowners,” Senate Republican Leader Shannon Grove (R-Bakersfield) said in a statement sent to the Asian Journal. “Legislative Republicans have requested that the governor create a plan to return this money and stop playing hide and seek with the funds. Otherwise, this is just another broken promise out of Sacramento.” (Klarize Medenilla/AJPress)