Nevada won’t pillage housing crisis dollars
May 23, 2012
Both Gov. Brian Sandoval and Attorney General Catherine Cortez Masto say Nevada won’t be one of the states effectively diverting millions of dollars intended to help ease the mortgage-housing crisis.
According to the New York Times, a growing number of states are diverting their share of the $2.5 billion cash settlement with banks to everything except programs to help homeowners.
The Times quoted a report by Enterprise Community Partners, an affordable-housing organization, that at least 15 states have announced they will use all or part of the money for such things as higher education and business development. A few, such as Texas, just stuffed the cash into the general fund.
Sandoval’s senior policy adviser, Dale Erquiaga, said that won’t happen in Nevada.
“The governor indicated from the outset he did not want to simply use the money to plug a hole,” he said.
He quoted the governor as saying the settlement language was very specific – that it should go toward programs to ease the mortgage-foreclosure crisis.
Recommended Stories For You
Masto said that from the beginning, she advised both the governor’s office and legislative leadership that Nevada’s share of the national settlement, as well as cash from the state’s separate settlement with Bank of America, are intended for programs to mitigate the housing crisis.
Nevada will get some $57 million from the national settlement and $30 million from the Bank of America settlement – a total of $87,368,430.
The settlement language states the money is to be used to avoid preventable foreclosures, enhance consumer protection and legal aid, provide financial and housing counseling and education, and enhance efforts to investigate, prosecute and prevent financial fraud and other deceptive acts.
But more than a few states disagree with Nevada and plan to use the money for other things, generally arguing that they can take the cash because it’s really a civil penalty won by the state.
California Gov. Jerry Brown plans to take that state’s $400 million to pay off state debts. According to the Times, Texas put its $125 million in the general fund, Missouri put the cash into higher education, and Virginia plans to help cash-strapped local governments.
Masto said diverting the money is not only a violation of that agreement; it’s not the best use of the money in the long run.
Erquiaga made a similar statement.
“If you can keep them in their homes, you will have a much longer strategic impact on the economy,” he said.
“It’s just been unbelievable,” said Masto, referring to the depth of the mortgage crisis. “So many people are suffering because of it, so let’s use the money in a manner that will help individual homeowners and those who have lost their homes.”
Masto is developing the final plan for spending the money, consulting all the certified housing counselors in the state as well as heads of legal aid programs. She said the idea is to set up one place for a homeowner to call that will direct them to the services they need.
They are looking at neighborhood stabilization programs, financial counseling and education, help for those who feel they were wrongfully foreclosed on or otherwise defrauded. Some of the money, she said, will restore some consumer protection staffing efforts in her office to find and prosecute fraud.
“There’s so much mortgage fraud going on, it’s incredible,” she said.
But she said the efforts must go beyond those who have lost their homes.
“We want to make sure we’re also looking at programs that actually help homeowners who are still paying their mortgages but are so upside-down it’s hard for them to refinance,” she said.
Erquiaga said some of the cash could be used to extend programs within the Department of Employment, Training and Rehabilitation to provide job training along with services such as child care to get people back on their feet.
Masto said that when the program is put together, she will present it to lawmakers and the governor’s office and to process those funding programs through the Board of Examiners and Interim Finance Committee.慴