Governor Brown Signs Bill that Could Determine the Fate of Disputed Foreclosure Funds
Earlier this month, Governor Jerry Brown signed Senate Bill 861 (SB 861), which allows the state to keep $331 million of disputed foreclosure funds. The bill cleared both houses on party-line votes and was signed by the governor two weeks ago. The disputed foreclosure funds were part of the National Mortgage Special Deposit Fund (NMSDF), which was established in 2012 to help those homeowners who were suffering and adversely impacted by the housing crisis. In 2015, the Sacramento Superior Court and California’s Third District Court of Appeals agreed that Governor Brown must repay the $331 million that was illegally diverted to the State’s General Fund. Neil Barofsky, lawyer for the National Asian American Coalition and other groups that sued over the funds, told the following to the San Francisco Chronicle,
There’s nothing about the bill that impacts the governor’s obligation to follow a federal consent order, particularly one that his agent (Harris) signed.
In 2012, then Attorney General Kamala Harris, who is now a U.S. senator, had helped to negotiate the settlement and was responsible for allocating the funds. Harris directed $331 million to a fund devoted to programs assisting homeowners who had been harmed by foreclosures, which included programs such as housing counselors, legal and consumer education, and efforts to investigate and combat financial fraud. SB 861 declares that Brown had properly cleared his funding decisions with lawmakers and had complied with the 2012 law by using the money to bail out state agencies overseeing housing and consumer services. Luckily, the courts still have a chance to voice their opinion in regards with how the funds should be used.