States Use Mortgage Settlement Money to Make Up Budget Shortfalls

Remember that $25 billion settlement between 49 states and the five largest mortgage servicers that federal and state governments crowed about as a historic success? According to a New York Times article, about 15 of these states have quietly announced that they plan to use the cash they’re receiving from the mortgage servicers–$2.5 billion intended to fund programs to prevent foreclosure, investigate allegations of financial fraud, and help homeowners in financial distress–to pay their debts and make up budget shortfalls. States intending to divert settlement funds for their general budget include California, Texas, Missouri, Indiana, Virginia, and Georgia. Meanwhile, 27 states have vowed to devote all of their share of the settlement payout to fund housing programs.

To find out what your state intends to do with its portion of the $2.5 billion cash settlement, read the report by Enterprise Community Partners, an affordable housing advocacy group.