State lawmakers are planning on raiding $50 million from the foreclosure settlement awarded to the state to make up budget shortfalls.
House Speaker Andy Tobin said lawmakers decided to use a portion of the funds awarded to the state for more pressing needs like welfare programs which lost federal funding.
Arizona received $97.9 million out of the national settlement which is supposed to be used for foreclosure relief programs which provide funds for foreclosure attorneys, housing counselors, hotlines and money to help homeowners with mortgage payments.
“We are using the funds to relieve pressure on the budget,” said Tobin. But housing advocates say they will sue if the funds are diverted to the state budget, citing the language of the settlement dictates the money “shall” be used to help troubled homeowners.
In March, 10,000 Arizona homes were in foreclosure. Valerie Iverson of the Arizona Housing Alliance said, “We still have the highest foreclosure rate in the country. We figure that the money they are going to sweep could provide 75,000 homeowners with housing counseling and 10,000 homeowners with legal assistance.”
The $26 billion from the national foreclosure settlement was divided among the states and was intended to prevent foreclosure or pay damages to homeowners who lost their homes because of improperly filed foreclosure documents. Some homeowners hired an Arizona foreclosure lawyer to contest a bank’s decision or seek a mortgage modification, but many others simply walked away from their homes without a fight.
Arizona Senate President Steve Peirce said that the funds from the foreclosure settlement were going to what amounts to glorified consumer education programs. However these programs along with the help of an Arizona foreclosure attorney can help many people prevent default, which in time will push the housing market to recovery.