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Lawsuit Brought Against California for Diverting Housing Funds

Posted by: In: Real Estate 18 Mar 2014 Comments: 0 Tags: ,

Three nonprofit home owner counseling organizations are suing California government officials, accusing the state’s governor of misappropriating $369 million in funds that were supposed to be used to help struggling home owners. The state instead used the money to pay down its debt.

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California, along with other states, was awarded a portion of a $25 billion national mortgage servicing settlement in 2012. The funds were to be distributed to states and go toward home loan counseling and other educational services to aid struggling home owners and help them avoid foreclosure. But the nonprofit groups are accusing California officials of diverting the funds from the settlement to other uses, chiefly to pay down state debt.

“We made it clear to the governor at that time that we did not agree with his decision,” Robert Gnaizda, general counsel to the National Asian American Coalition (one of the plaintiffs in the suit) told The New York Times. “But we didn’t want to bring a case when the state was in such an enormous fiscal crisis. With the governor now talking about possible surpluses of up to $10 billion before he finishes his second term, we …read more

Source: Realtybiznews



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