'Mortgage Settlement' Funds Paying for Prisons, Not Foreclosure Relief

Needy states use housing aid cash to fund prisons, education shortfalls, and plug budgets

- Common Dreams staff 

 

As part of a financial settlement over fraudulent mortgage practices earlier this year, some of the nation's largest banks agreed to make payments to state government totaling $2.5 billion that would be earmarked for victims of wrongful foreclosure and other distressed homeowners. Instead, reports the New York Times today, a majority of those funds are going to plug state budget shortfalls, leaving homeowners without recourse and validating critics who questioned the strength of the deal when it was announced in February.

The total settlement was for $25 billion, but only a tenth of that was to come in the form of cash payment to the states. The remainder was to come in the form of “credits” for reducing mortgage debt and other loan activities.