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Few foreclosure funds went to help Utah homeowners

Published March 16, 2012 11:22 pm

Settlement • Most of $22M from deal with banks won't aid those hurt by the housing crisis.
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It appears that only a small portion of the nearly $22 million coming to the Utah state government from a settlement with the nation's big banks over improper foreclosure practices ended up in programs related to helping those who are losing their homes or have lost them.

The cash from the settlement was lumped into the state's general fund during the last days of the just-concluded session of the Legislature, meaning it can't be directly traced.

But advocates who wanted more of the money used for programs to help prevent foreclosures or to help those displaced say they were left short-changed, except for $1.75 million that went into programs for the homeless and another $2 million that went to the Attorney General's Office to hire more mortgage and financial fraud investigators and prosecutors.

"I'm disappointed," said Sen. Ben McAdams, D-Salt Lake City, who sponsored the bill to allocate funds to the Attorney General's Office. "People of the state of Utah were harmed, and I think we should have provided some relief to those who were affected by it. We shouldn't treat this like a windfall."

The money is to come from a settlement announced Feb. 9 in which federal agencies and 49 states struck a $25 billion deal with five big banks over abusive foreclosure practices.

On the heels of the Great Recession, caused in part by the bursting of the real estate bubble, Utah has had one of the highest rates of foreclosures among states. The state was to get about $23 million from the settlement but will end up with $21.9 million, according to Ric Cantrell, a spokesman for the Utah Legislature.

Utah homeowners also are to receive about $149 million worth of foreclosure relief from the settlement, coming in the form of reductions in loan principals, modifications of terms or forgiveness of penalties, with those already foreclosed on eligible for $2,000 payments.

The $21.9 million was placed into the general fund two days before the annual session of the Legislature ended on March 8 and mingled with other state funds to create a $51 million surplus that was doled out in the final hours.

The Executive Appropriations Committee sent $11 million to the state's Rainy Day Fund. But Cantrell said the money can't be traced directly from the foreclosure settlement, as some advocates had suggested.

"It's true $11 million of the general fund money went into the Rainy Day Fund at the end of the session," he said. "To say that money came directly from the $21.9 million is a stretch."

Advocate Pamela Atkinson said homeless entities that received funds were Volunteers of America, $500,000; St. Anne's in Ogden, $500,000; The Road Home, $500,000; and $250,000 for the Pamela Atkinson Homeless Trust Fund.

But Afton January, foreclosure prevention coordinator for the Utah Housing Coalition, said that although those are worthy recipients, housing advocates had asked for monies to hire counselors to help those facing the loss of their homes.

"It is disappointing to see that our lawmakers have chosen not to spend even a small portion of this funding on initiatives, programs and services that will help those whom this settlement was designed to help — homeowners who were wrongfully foreclosed upon and those who are still underwater [or] facing foreclosure," she said in an email.

Housing programs last year had to lay off more than half of the 19 counselors who were hired in 2009 with Obama administration stimulus monies that were allocated by then-Gov. Jon Huntsman. The counselors over two years saved 1,292 families from foreclosure, January said.

McAdams' bill, with its $2 million from the settlement, will help hire attorneys and investigators to conduct more investigations and prosecutions of mortgage fraud and other white-collars crime, said Kirk Torgensen, chief deputy attorney general for criminal cases.

"It's not limited to mortgage fraud," he said. "Sen. McAdams specifically made it broader, encompassing all white-collar fraud."

The S.J. Quinney College of Law at the University of Utah had submitted an ambitious plan to use $10 million of the money for a legal clinic that would include professors, students and staff from the Attorney General's Office who would provide help to homeowners.

Associate Dean Christopher Peterson said the college still hoped some money going to the attorney general might be used for such a program.

Ally Isom, spokeswoman for Gov. Gary Herbert, said the governor believes the Legislature met his general recommendations for use of the settlement funds, pointing to the monies that went to homeless programs.

"The governor felt overall that the priorities he supported were honored," she said.


Twitter: @TomHarveySltrib #utforeclosures —

$3.75M of $21.9M to go to housing-related programs

Volunteers of America • $500,000 for Homeless Youth Center

St. Anne's in Ogden • $500,000 for homeless facility

The Road Home • $500,000 for Wendell Apartments permanent housing

Pamela Atkinson Homeless Trust Fund • $250,000

Attorney General's Office • $2 million for mortgage fraud and white-collar crime prosecution

Source: Housing advocates, state officials






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