How are states spending mortgage foreclosure settlement funds?

| Nov 14, 2012 | Foreclosure |

When the national mortgage-foreclosure settlement against the biggest mortgage companies yielded $135 million for Texas, housing advocates and distressed homeowners were glad to hear that the state would have money to help it prevent future foreclosures.

The agreement provided that the states would use the money “to the extent practicable … for purposes intended to avoid foreclosures.” Yet, according to a report released by Enterprise, nearly half of that money has been used to help states close budget gaps, not to help with the foreclosure crisis. Only 14 states have plans to put the full amount of settlement money to housing relief.

Yet, according to the U.S. Department of Housing and Urban Development’s secretary, Shaun Donovan, it is positive that “states have allocated nearly a billion dollars for housing and anti-foreclosure activities that would otherwise not have been available.” He urged states to spend the remaining funds “in a similarly beneficial fashion.”

Texas has plans for the funds that it received but it is waiting for a legislative vote to begin spending. Some housing advocates are not convinced that money will be used to reduce foreclosures. Instead, they worry that the state will hold the money in order to improve revenue estimates, which can in turn protect other programs.

Foreclosure numbers are down around the state and across the nation, but that does not mean we have seen an end to the housing crisis or that people are not currently being affected by foreclosure. Many people around Texas still feel the sting of improper home loans and underwater mortgages. More can always be done.

If you are facing foreclosure, you have options. Some of the options, such as filing for bankruptcy, will even let you keep your home. To learn more, please visit our pages on foreclosure.

Source: The Wall Street Journal, “States shift foreclosure-suit funds,” Nick Timiraos, Oct. 18, 2012