Florida to spend $60 million from banks settlement
Updated On: Jan 11 2013 11:17:33 AM EST
Some of Florida's share of a national $25 billion settlement with five of the nation's largest mortgage lenders is finally going to start being spent.
But it's unclear how immediate and how wide of an effect the money will have in one of the states hardest hit by the foreclosure crisis and the recession.
A legislative panel next week is expected to sign off on spending $60 million - or the first portion of $334 million Florida received directly under the settlement. This is money going directly to state government and is separate from an estimated $8 billion also expected to go to help homeowners and borrowers in the state.
Under a deal worked out between Attorney General Pam Bondi and legislative leaders, the $60 million will be used to help first time homebuyers, provide counseling to homeowners dealing with foreclosure and default, and help the state's court system deal with foreclosure cases.
More than half of the money - $35 million - will go a program run by the Florida Housing Financing Corporation to assist first-time homebuyers, including providing them with down payment assistance.
That's nearly double what is now provided for the program.
David Westcott, director of homeownership programs for the organization, said the program is "market driven" and there isn't a backlog of people seeking help. He said it is likely it would take more than a year to spend the money.
"We are not turning people away now," Westcott said.
Westcott stressed, however, that the money could wind up helping people purchase previously foreclosed homes or homes that are in a short sale, which is where a bank agrees to a sale that wipes out any remaining mortgage.
Another $10 million will also go to the Florida Housing Finance Corporation to pay for a foreclosure counseling program that was launched back in 2007. A spokeswoman for the corporation said the program links counselors with homeowners in areas that are already experiencing high foreclosure rates.
The national settlement was announced in February 2011 but the state's share remained in escrow for months because Bondi and state legislators disagreed over who had authority to spend it. The money could not be released without Bondi's approval since her office helped negotiate it. But legislators pointed out that the attorney general cannot spend money without legislative approval.
Both sides reached a deal that results in $74 million of the total $334 million going straight into the state's main budget account where lawmakers can use it any way they want.
After next week, there will still be $200 million left. The full Legislature is expected to approve spending that portion during the upcoming 2013 session. Bondi and legislative leaders have said possible uses of these funds include foreclosure prevention, neighborhood revitalization, affordable housing, homebuyer or renter assistance, legal assistance, counseling and other housing-related programs.
Other states have already been spending settlement money on everything from demolishing vacant foreclosed homes to paying for mediation programs to help borrowers stay in their homes. Some states, however, have used some of the money to plug budget gaps.
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