This past February (2012) the state attorneys general from 49 states reached a historic settlement with five major U.S. housing lenders (Bank of America, Citigroup, GMAC, J.P. Morgan Chase, and Wells Fargo) that would provide some $25 billion in relief to underwater homeowners and those who already lost their homes due to foreclosure. Yet more than two months later, most of that money has not even begun to go out, according to a story published on May 1 in the Nashua Telegraph.
The story in the New Hampshire newspaper was focused on the Granite State’s share of the settlement which appears to be in the neighborhood of $43 million. Of that total sum, $9.5 million will be given to homeowners who are underwater and $4.5 million to those who have previously been foreclosed on. There’s been no word on what will happen with the remainder of the money, though it’s speculated it may go to the state for use in other affordable housing programs.
According to Nashua Telegraph writer Jake Berry, one of the reasons why the money is slow to arrive is the fact that the settlement was just officially approved in April. Now banks have the monumental task of going through applications to see which homeowners will receive money directly.
“Because the money will be distributed directly from the five banks, rather than the state or federal government, it’s impossible to tell how many people will receive money under the settlement,” he wrote.
According to state Attorney General Michael Delaney, the number of phone calls to his office regarding help with mortgages has increased three-fold since news of the settlement broke a couple months ago. But Delaney concedes that ignorance among homeowners regarding the financial assistance still remains high. Delaney told the Telegraph that “outreach continues to be an important part of what we’re doing,” in reference to the efforts being undertaken by his office.
The coming few months should give New Hampshire, and the rest of the country, some idea of how effectively settlement money will be distributed.
When the settlement was first announced there were high expectations that the money would go a long way to help righting the ship of the capsized housing market. Yet within days of the settlement they were already rumors suggesting some of the states were going to divert money away from housing assistance and use it to fund general state budgets.
A couple of states, like Missouri and Wisconsin even brazenly admitted plans to do so. So it’s encouraging to see the state of New Hampshire at least willing to allow $15 million of their total to go directly into the hands of homeowners without ever flowing through government coffers.
If New Hampshire officials have even a modicum of decency and morality they will ensure the remaining $30 million follows the same path. The housing settlement money is supposed to be going to homeowners negatively affected by bank foreclosure proceedings and those trying to avoid foreclosure through loan modifications. For any of the money to be diverted into a general fund is nothing short of reprehensible. It is the type of politics that helped to create the mortgage mess to begin with. Hopefully New Hampshire will recognize it for what it does and do the right thing.