National Mortgage Settlement Money must be Repaid by California
Last month, the California Supreme Court refused to hear an appeal by Gov. Newsom’s administration disputing lower court rulings that found the state wrongly used money from a national mortgage settlement to help balance the state budget. Gov. Gavin Newsom’s administration announced that it would begin work on transferring $331 million back into the special fund designed to help California homeowners that were hit hard by the mortgage crisis. It turns out that three years of state budget expenses were covered by a portion of what California received from a nationwide mortgage settlement from 2012 that was paid by large banks and lenders. Former Gov. Jerry Brown championed the use of these funds to balance the state budget during his second tenure as governor. Faith Bautista, president and chief executive of the National Asian American Coalition, stated the following regarding their efforts that helped the funds being repaid,
Truth prevails. They’re now facing the reality that the money belonged to the homeowners in distress.
California legislators last year passed legislation seeking to block a court ruling to repay the $331 million from the fund originally designed for statewide homeowner assistance efforts. The state budget signed by Newsom this year includes $19.2 billion in cash reserves, which means that the funds should be diverted back to the fund as soon as state leaders take action when they return this month to close out the 2019 legislative session. California’s share of the nationwide mortgage settlement was $410 million, but most of the money was used for budget-balancing items. Although some of those items were related to housing, some of those housing related items predated the settlement. We will have to wait and see how long it takes state leaders to have those funds repaid so that they can be used for what it was intended for.