Law aims to al­low state to ig­nore court or­der to re­pay mort­gage fund

Ripon Bulletin - - Local -

SACRA­MENTO . (AP) — Cal­i­for­nia Gov. Jerry Brown signed leg­is­la­tion Mon­day that at­tempts to cir­cum­vent a court or­der re­quir­ing the state to pay back $331 mil­lion to a spe­cial fund re­lated to the mort­gage cri­sis.

The bill con­cerns a 2012 set­tle­ment be­tween all 50 states and the ma­jor mort­gage ser­vices re­lated to the Great Re­ces­sion. States were awarded a col­lec­tion $2.5 bil­lion, with Cal­i­for­nia bring­ing in $410 mil­lion.

The Leg­is­la­ture passed a law in 2012 to set that money in a spe­cial fund. Law­mak­ers and Gov. Jerry Brown then drew $331 mil­lion out of the fund for a va­ri­ety of other pro­grams, in­clud­ing to ser­vice debt on hous­ing bonds.

Three non-prof­its sued the state in 2014, ar­gu­ing the money was im­prop­erly used. A trial and ap­peals court sided with the plain­tiffs, with the ap­peals court in July or­der­ing the state to re­turn $331 mil­lion to the mort­gage fund.

The leg­is­la­tion aims to undo the court ruling by stat­ing the Depart­ment of Fi­nance fol­lowed leg­isla­tive guide­lines in dis­tribut­ing the money and that law­mak­ers were “aware of, and ap­proved, the al­lo­ca­tions and ex­pen­di­tures in ques­tion.”

It’s un­clear if the leg­is­la­tion will ef­fec­tively blunt the court or­der.

The three plain­tiffs were the Na­tional Asian Amer­i­can Coali­tion, COR Com­mu­nity De­vel­op­ment Cor­po­ra­tion and the Na­tional His­panic Chris­tian Lead­er­ship Con­fer­ence.

“It’s dis­ap­point­ing that Gover­nor Brown’s al­lies in the Leg­is­la­ture are now try­ing to de­prive strug­gling home­own­ers of money that is right­fully theirs and that they have fought long and hard to re­cover through the courts,” Faith Bautista, pres­i­dent of the Na­tional Asian Amer­i­can Coali­tion, said in a mid-Au­gust press release about the bill.

When the set­tle­ment was adopted, then-Cal­i­for­nia At­tor­ney Gen­eral Ka­mala Har­ris gave guid­ance that it could be used for con­sumer fraud ed­u­ca­tion, bor­rower re­lief, grant pro­grams to as­sist hous­ing coun­selors and other pro­grams or ac­tions that would ben­e­fit Cal­i­for­nia home­own­ers af­fected by the mort­gage cri­sis, ac­cord­ing to the ap­peals court ruling.

The state moved that money to the gen­eral fund to ser­vice debt on hous­ing bonds and for pub­lic pro­tec­tion and con­sumer fraud en­force­ment and lit­i­ga­tion.

Bautista could not im­me­di­ately be reached for com­ment Mon­day.

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