After finalizing the $25 billion mortgage servicing settlement between the five largest servicers and 49 state attorneys generals, many nonprofit and trade associations are urging their state leaders to invest the allocated money towards the housing industry.
Florida Realtors submitted a letter to Attorney General Pam Bondi requesting that the Sadowski Housing Trust Fund should be at the top of the state’s list to receive a portion of the expected $300 million due from the foreclosure legal settlement with the nation’s biggest banks—Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial.
The trade association said at least $100 million should be dedicated to the trust fund, which supports affordable housing efforts across the Sunshine State through programs such as the State Housing Initiative Program and State Apartment Incentive Loan program.
SHIP provides funds to local governments as an incentive to create partnerships that produce and preserve affordable homeownership and multifamily housing. The program offers families who have low and moderate incomes with assistance to purchase a home as well as money to repair a property.
The SAIL program provides low-interest loans on a competitive basis to affordable housing developers each year. This money often serves to bridge the gap between the development's primary financing and the total cost of the development.
Under the servicing settlement, state funds are supposed to be used “to avoid preventable foreclosures” and “ameliorate the effects of the foreclosure crisis.” Florida Realtors believes programs through the Sadowski Housing Trust Fund are best suited to combat these issues.
“The SHIP and SAIL programs fund several activities that directly address these purposes,” said Summer Greene, president of Florida Realtors in the letter to Bondi. “SHIP dollars can be used for downpayment and closing cost assistance, as well as the rehabilitation of foreclosed homes….SAIL dollars are made available for construction or rehabilitation of multifamily units…ensuring that those who have lost their homes in the foreclosure crisis have a place to live.”
Over the last few years, the Florida Legislature has taken money out of the Sadowski Trust Fund and added it to general revenue because of financial problems. With the availability of the servicing settlement funds, Housing Coalition members point out that transferring some of this money would help ease the devastating impact those cuts have had on housing programs.
“Using preexisting programs to administer the settlement money, rather than creating new programs, is the most cost effective and expeditious way to implement the funds,” Greene added in the letter. “These programs have a high standard of excellence in the housing community and are used as models for programs around the country by various state and local governments.”
Another state that has been hard hit by the housing crisis is Arizona. In the last four years, nearly 550,000 foreclosure filings have taken place in Arizona, according to RealtyTrac data.
Because of the foreclosure crisis happening here, the Arizona Chapter of the National Association of Hispanic Real Estate Professionals is calling on Arizona Governor Jan Brewer to use all of the funds awarded from the mortgage servicing settlement from the five largest mortgage servicers to help the state’s ailing housing market.
Arizona is supposed to receive $1.6 billion from the settlement, with only California and Florida due more money. However, only $97 million will come in cash payments to the state while the rest will come in the form of principal reductions.
Brewer said that a large portion of the cash payment is going to be used for general budgetary issues and not exclusively for housing. But NAHREP leaders believe that aid to the state’s hardest hit foreclosure zip codes is desperately needed to stimulate any type of housing recovery in this region.
“Housing is dragging down our entire state economy and things won’t improve until housing stabilizes. Recent data shows that 48.3% of our property owners are still underwater, second only to Nevada at 60%,” said Gail Buck, founder of the NAHREP-Arizona affiliate chapter. “Homeowners from across the state are in need of counseling and legal aid. We would be deeply disappointed if any of these funds were diverted away from their intended purpose.”
