Florida Grabs a Chunk of Foreclosure Settlement Money for State Budget
Written by Emil Fleysher | July 3, 2012 | Bankruptcy
Out of $334 million in cash payments sent to Florida in a multibillion dollar mortgage settlement with major banks, more than $33 million will help strengthen the state’s budget. Florida is one of several states taking a portion of the $2.5 billion in cash payments from banks and using it for programs not directly related to the foreclosure crisis. Florida’s total take in the $25 billion national settlement is worth about $8.4 billion.
About $334 million of that came in the form of a cash payment to the state, and the attorney general’s office has maintained that most of the money will be used to directly help homeowners. Settlement documents indicate that Bondi negotiated the 10 percent civil penalty, resulting in a $33.4 million cash payment to the general fund. For now, Florida is only using 10 percent of the cash payment to strengthen its general budget, but some other states are using all or a majority of their funds to plug large budget holes. A few states have clauses similar to Florida’s, directing 10 percent of the money to general revenue as a penalty.
Still, some states have decided to use all of the funds for homeowners, citing that they were the main victims in the robo-signing scandal. The remaining $300 million in Florida’s settlement cash has not yet been allocated. Bondi asked members of the public for suggestions on how to spend the money this month and has stated that it would be used to provide direct relief help for homeowners. Housing groups have advocated for the money to be used for legal aid for homeowners and low-income housing programs.
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