Shafted! Why are Homeowners Still Left to Struggle Against Big Banks Alone?

Photo Credit: woodleywonderworks on Flickr

Across the country, states are diverting foreclosure settlement funds to plug budget holes.

May 18, 2012

It was with great fanfare that the Obama administration, alongside nearly every state’s attorney general, announced in February that a $25 billion accord had been reached with the nation’s five biggest banks, settling charges that the banks engaged in widespread foreclosure fraud. Those billions were intended to provide relief to struggling homeowners, using the banks’ own money to help the victims of Wall Street malfeasance.

“These banks will put billions of dollars towards relief for families across the nation,” President Obama said. “They’ll provide refinancing for borrowers that are stuck in high interest rate mortgages. They’ll reduce loans for families who owe more on their homes than they’re worth. “

However, more than a dozen states across the country are doing their best to undermine the settlement by diverting the funds to other areas of their budgets. Arizona recently became the latest state to do so, taking $50 million meant to aid homeowners and instead plowing it into the state’s general fund (after scrapping an earlier plan to use the money to pay for prison construction).  READ MORE