Should States Use Settlement Money for Deficits or Housing? Oh, So What and Who Cares?
I cannot believe how many articles have been written about the various states that have decided to use some or all of the money from the national mortgage settlement to pay down budget deficits and fund other non-housing related programs.Â The whole debate is pointless, and those involved obviously just donâ€™t know enough to know that.
Someone named Amanda Sheldon Roberts of Enterprise Community Partners even published a report titled: Understanding How States are Spending their Share of the National Mortgage Settlement.Â The New York Times has been all over the issue too, as in, â€śNeedy States Use Housing Aid to Plug Budgets,â€ť and ProPublica, who I think aspires to become â€śThe Foreclosure Channel â€“ All Foreclosures All the Time,â€ť came out with, â€śBillion Dollar Bait & Switch: State Divert Foreclosure Deals.â€ť
ProPublica even has a whole section of their site called â€śForeclosure Crisis â€“ Banks & Government Fail Homeownersâ€¦ An Ongoing Investigation.â€ťÂ Well, I do love an investigation.Â And Lord, I do hope they learn something.
With all this coverage, youâ€™d think there was actually a settlementâ€¦ with actual money being paid outâ€¦ and that someone cared one way or another about this topic.Â And that it matters, one way or the other, what the states are doing with the hypothetical settlement money.
Youâ€™d think all that, but it wouldnâ€™t make it true.Â To me, itâ€™s almost like the flurry of articles that were written about Y2K back in 1999â€¦ as inâ€¦ so what and who cares.
Homeowners, in general, certainly donâ€™t.Â Most barely know what the subject is about.Â And the ones focused on the foreclosure crisis are about as interested in whatâ€™s going on with the settlement as they were about the OCC Independent Foreclosure Review.
I asked a homeowner who follows my blog, â€śSo, what do you think about the states diverting funds from the settlement to cover the state budget deficits?â€ť
She replied, â€śThe settlement is a joke.â€ť Â (Not that she was laughing.)
I asked a couple of homeowners who are not part of the foreclosure crisisâ€¦ yet.Â Neither had heard of the national mortgage settlement.Â And the one homeowner I spoke with that had heard about the settlement was happy that the money was being diverted.
â€śIâ€™m glad theyâ€™re doing that,â€ť he told me.Â â€śPeople bought homes they couldnâ€™t afford and now theyâ€™re looking for a free ride.â€ť
â€śYeah, thatâ€™s true,â€ť I said genuinelyâ€¦ as I started pretending to answer my phone.Â Then I held up one finger to indicate that I couldnâ€™t continue our conversation at the moment, and walked away to take my pressing and yet imaginary call.
When I saw the very first state make a grab for the settlement cash allegedly headed the stateâ€™s way, I laughed and vowed not to let it get to me.Â Mandelman Matters, after all, only writes about things that â€śmatter,â€ť and this most assuredly does not.
About a month ago maybe, I saw a story about some group in Arizona I think, fighting the governor or legislature after they had already snatched their ill-gotten booty.
I thought to myself: â€śYeah, wellâ€¦ good luck with that, guys.Â You go ahead, I think Iâ€™ll sit this one out, if you donâ€™t mind.â€ť
To-date, roughly $974 million has been diverted from the foreclosure crisis, which comes out to about 40 percent of the total amount earmarked for the states.Â And ProPublica now has an election results type map where you can watch state governments continuing to pilfer funds away from foreclosure victims as additional decisions are made.
I wonder what happens when all the money is gone.Â I think it would be cool if the map just went, â€śPOP!â€ť and disappeared.
The groups that are upset over the way things have been going all say that they want to see the money go to assist the victims of foreclosures, but theyâ€™re missing the point… it just doesnâ€™t matter.
California, the state with the highest numbers of foreclosures and the largest budget deficits is taking all the money to the stateâ€™s general fund.Â Florida, another state smothered in foreclosures, hasnâ€™t made final decisions yet, but at this time, the Sunshine State has allocated none of its $334 million and change to homeowners.Â And then thereâ€™s Georgia, a state desperate to do something about foreclosures, has taken the entire $99,400,000 directly to the stateâ€™s coffers.
Ohio is the bestâ€¦ theyâ€™re setting aside something like $75 million to tear down homes.Â Now thatâ€™s compelling television.Â Hereâ€™s an idea for the state to raise some additional revenue: Find the family that had to be evicted from each home so it could be torn down a year or two later and film their reaction to their home being razed to rubble.
The show could be called: Are You a Worthless Deadbeat, because if you werenâ€™t sure before as to whether our society thought of you as a worthless deadbeatâ€¦ after they throw you out of your home in order to tear it downâ€¦ well, you know youâ€™re a worthless debate after that. Â Iâ€™ll bet people would go Pay-per-View on something like that.
But, the overriding point here is that it doesnâ€™t matter in the least whether the states take the money that was intended for homeowners in foreclosure and use it for whatever other purpose. Â Build a sports stadium with the moneyâ€¦ that would be niceâ€¦ maybe the money could buy LA an NFL teamâ€¦ that would be something to consider.Â Or just cover the stateâ€™s bond payments to JPMorgan or whomever we own bazillions of dollars in interest toâ€¦ I really donâ€™t care.
In fact, donâ€™t even tell me and Iâ€™m even okay with that.Â Just pretend like the whole settlement thing didnâ€™t even happen.
I donâ€™t want ProPublica to be upset with me for saying this, because they really did build a fantastic interactive map and allâ€¦ really coolâ€¦ just entirely irrelevant.Â Maybe they could use it for something else, like tracking the fiscal meltdown of the states as they march towards bankruptcy over the next few years.Â Just a thought.
Anyway, all this media coverage of the states taking the money for other purposes is almost funny to me.Â Why would it matter what the states do with the money?
Itâ€™s not like any of the states have the foggiest idea on what to spend the money in order to help those in foreclosure.Â So, what would they have done with it anyway?
Look, Iâ€™m not being cynical hereâ€¦ and Iâ€™m not being snarky.Â Iâ€™m just stating the obvious and pointing out the established facts.
Below is a list of the â€śHardest Hit Statesâ€ť and the amounts of money they each received from the federal government to fund programs to help mitigate the damage of foreclosures.Â And theyâ€™ve had this money SINCE EARLY 2010.
AlabamaÂ – $162,521,345
Arizona – $267,766,006
CaliforniaÂ – $1,975,334,096
FloridaÂ – $1,057,839,136
GeorgiaÂ – $339,255,819
IllinoisÂ – $445,603,557
IndianaÂ – $221,694,139
KentuckyÂ – $148,901,875
MichiganÂ – $498,605,738
MississippiÂ – $101,888,323
NevadaÂ – $194,026,240
New JerseyÂ – $300,548,144
North CarolinaÂ – $482,781,786
OhioÂ – $570,395,099
OregonÂ – $220,042,786
Rhode IslandÂ – $79,351,573
South CarolinaÂ – $295,431,547
TennesseeÂ – $217,315,593
Washington DCÂ – $20,697,198
Â Hereâ€™s what it says about the program on the Making Home Affordable websiteâ€¦
Early in 2010, Treasury announced that the Hardest Hit FundÂ® would provide more than $7.6 billion in aid for homeowners in states hit hardest by the economic crisis. Since then, state housing finance agencies have used the fund to develop programs that stabilize local housing markets and help families avoid foreclosure.
So, let me be the first to say: Bang up job so far guys!Â Crackerjack workâ€¦ absolutely crackerjack.
To give you a couple of examplesâ€¦
Arizona got $97,800,000 from the national mortgage settlement and theyâ€™ve already taken $50 million for the stateâ€™s general fund.Â And people in are upset about thatâ€¦ I think some group may even being suing over it.
But the State of Arizona has had $267 million to spend on the foreclosure crisis for two and a half years and during that time theyâ€™ve doneâ€¦ well, almost nothing.Â After the first year of their homeowner assistance program, it had helped literally ONLY ONE HOMEOWNER, but the programâ€™s spokesperson did say there were two or three other homeowners in the process.
So, what possible difference does it make that the state takes the $97 million for the general fund, when the state did essentially nothing after having $267 million for 2.5 years?Â The answer isâ€¦ it doesnâ€™t make any difference at all.
California has had almost $2 billion in Hardest Hit funds and what has the state done with the money to stop foreclosures during that time?Â Well, letâ€™s seeâ€¦ umâ€¦ to be fair itâ€™s something greater than â€śDiddly Squat,â€ť but quite a bit shy of â€śMade any Noticeable Difference.â€ť
Californiaâ€™s program was divided into four parts.Â The most successful of the four was the one that provided money to defray moving expenses for those losing homesâ€¦ basically enough money to rent a U-Haul for people who hadnâ€™t made a mortgage payment in two years.Â Brilliant stuff, Iâ€™m sure youâ€™d agree.
Another California program involved money for unemployed homeowners so they could make mortgage payments for up to six months, if qualified.Â Now, I donâ€™t know how many did qualify for the program, but I know itâ€™s not that many because Iâ€™ve never heard of anyone who didâ€¦ and I hear about everything.
But, regardlessâ€¦ this program does nothing to stop foreclosures, it just hands over six months of mortgage payments to the banks.Â After the six months ran out, assuming the homeowner still couldnâ€™t find work, or only found work making much less money, then foreclosure would again be in the homeownerâ€™s future.
I could go on and on and onâ€¦ and onâ€¦ itâ€™s the same story in every single one of the 19 â€śhardest hitâ€ť states.Â So, who cares what the states do with the national mortgage settlement moneyâ€¦ they could leave it earmarked for foreclosures, but so what?Â Theyâ€™ve got a whole lot more than that already designated for foreclosures and theyâ€™re not doing anything even remotely effective with that.
Oh, I knowâ€¦ those who are upset all say the same thing about how the money should be spent: counseling and legal aid, but thatâ€™s just a conditioned responseâ€¦ like a monkey see, monkey do sort of thing.Â Both have existed over the last four years and you can see where we are anyway.Â (Secretary Geithner, by the way, says that Hardest Hit funds cannot be used to fund legal aidâ€¦ isnâ€™t that interesting?)
Iâ€™m sure the people upset about where the money isnâ€™t going include those that would potentially be recipients of that money.Â And Iâ€™m not saying thatâ€™s necessarily a bad thing, but it does explain something about their motivation.
Donâ€™t get me wrong, by all means fund legal aidâ€¦ fund counseling servicesâ€¦ fund them until the cows come home.Â But donâ€™t pretend that doing so is going produce a different result than we have today.
In fact, I think we should all stop all pretending related to the foreclosure crisis.Â Frankly, Iâ€™m damn tired of it, and those that donâ€™t know any better should be both embarrassed and ashamed.
The president never talks about itâ€¦ neither does Mitt Romneyâ€¦ neither does any other government official unless thereâ€™s some reason to look â€śconcerned.â€ťÂ The national mortgage settlement is much ado about nothing.Â Sure, it will help some, but precious few.Â Its biggest contribution has been the positive PR its provided for the administration.
But homeowners are reaching their boiling point.Â Theyâ€™ve had more than enough of the positive PRâ€¦ the new programsâ€¦ the â€śenforcementâ€ť that never enforces anythingâ€¦ the lawsuits that only get overturned on appeal.Â There are still those holding onto a last shred of hope, but thatâ€™s fading fastâ€¦ itâ€™s much later than you think.
Theyâ€™re all done playing with interactive map graphics on ProPublica that track how theyâ€™re being screwed.Â And as to ProPublicaâ€™s sure to be award-winning coverage of the foreclosure crisis thatâ€™s labeled an â€śOn-going Investigation,â€ť hereâ€™s a free tipâ€¦ the investigation has ended and the jury is inâ€¦ this is a national tragedy.
But, I understand now that this is not an accidental tragedy, but the preordained outcome of a conscious decision by my government to allow foreclosures to be the vehicle through which American consumers are forced to deleverageâ€¦ no matter the pain, no matter the loss, no matter the toll on human life or the degree of human suffering.
Itâ€™s happening all around us every dayâ€¦ I live at ground zero and Iâ€™ll stay here as long as I can screaming my head off and trying to help homeowners survive if I can.
But itâ€™s happening because government wants it to happen, make no mistake about that.Â So, letâ€™s stop pretending things like the mortgage settlement matterâ€¦ I know they donâ€™t and so do you, Mr. President.
I get itâ€¦ the states are broke and headed for bankruptcy with a several year stopover in austerity.Â So, take the moneyâ€¦ take the hardest hit money tooâ€¦ take it all.Â Raise our taxes while you lower our wages, and just keep telling us weâ€™re recovering.
Just stop pretendingâ€¦ it was adorable when my daughter did it at age four, but when adults do itâ€¦ well, not so much.