An agreement between Attorney General Pam Bondi and the state's incoming legislative leaders over how to spend hundreds of millions of dollars from a national settlement over foreclosure abuses is too vague and too late. Bondi has been rightfully pushing to get the money spent quickly on help to homeowners facing foreclosure, but state lawmakers have been standing in the way. What they have finally agreed upon would delay most of the help until well into next year without specifically designating how the money would be spent. The agreement appears to be more concerned with the prerogatives of the Legislature than the interests of Florida's struggling families.
This money is part of a $25 billion national settlement in the aftermath of the so-called "robo-signing" scandal in which some banks were fabricating documents and falsifying affidavits in foreclosure cases. Florida received $334 million to provide help to homeowners in the form of foreclosure prevention and other housing-related services. That money is in addition to the approximately $7.5 billion in direct relief from the banks to the state's homeowners in the form of mortgage modifications and refinancing.
If the state had disbursed the money quickly to legal aid organizations and the state courts, an army of lawyers and counselors could have been assigned to help financially troubled households negotiate with lenders to stay in their homes or provide representation during the foreclosure process. But that hasn't happened. Since April, most of the money has been sitting in an escrow account while squabbling continued among Bondi and incoming Senate President Don Gaetz, R-Niceville, and Speaker-designate Will Weatherford, R-Wesley Chapel. Their argument is over turf: whether Bondi had the authority to spend the money or the Legislature had to do it; and how the money should be spent.
The agreement they reached is less than ideal. It says the money will go through the normal legislative process, with only $60 million of the settlement money to be released early by the Legislative Budget Commission at its next meeting. That money is designated for down payment assistance, legal aid and counseling, to the state courts to ease the foreclosure backlog, and for the attorney general's enforcement efforts. Another $72 million will go to the general state budget as a civil penalty.
The remaining $200 million, according to the understanding among Bondi, Gaetz and Weatherford, will be appropriated for housing-related activities during the 2013 legislative session in the spring. That will make Florida one of the last states to use the money. And when the time finally does come, there will be little to prevent the redirection of this money to some other purpose in the heat of legislative budgeting. Some states — including California, Missouri, Alabama, Georgia, South Carolina and New Jersey — have ignored the intent of the settlement and put the money into general funds. Florida has more than 375,000 foreclosure cases in court. That settlement money is intended to address this ongoing crisis, and the money should not disappear into Tallahassee's black hole of back-room appropriations deals, where it could easily be used to cover up the real cost of more unnecessary tax cuts.