12 Investigates: Where did VA’s mortgage settlement go? - NBC12 - Richmond, VA News

12 Investigates: Where did VA’s mortgage settlement go?

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RICHMOND, VA (WWBT) -

A quarter of a million Virginians have homes that are underwater. Thousands more have dealt with foreclosure.

12 Investigates teams up with the journalism non-profit Pro Publica and takes a look at the money given to Virginia from this year's landmark mortgage settlement.

It's not often a state gets an extra $66,500,000. Virginia set aside roughly $7 million for aide for homeowners. The rest — $59 million — it went into the state's general fund.

"It's really disappointing. I think our leaders have really let Virginia down," said Ali Faruk. He works with Housing Opportunities Made Equal — a non-profit housing counseling agency. He's on the front lines of the housing crisis and says the legislature got it wrong.

"They (lawmakers) had a real opportunity to address the housing crisis. They had a real opportunity to help people that are underwater, to help people struggling to find affordable housing, to help people that are still going through foreclosure. Instead they just used the money to plug random budget holes," said Faruk.

It was Attorney General Ken Cuccinelli who secured Virginia's portion of the $25 billion landmark mortgage settlement. The five largest mortgage servicers paid up for foreclosure abuses and fraud.

"It will help us start to clear the market so we can get out of, what we hope is the bottom of this housing plunge and start to move out of it," said Cuccinelli, the day the settlement was announced.

Faruk also argues, like several other AG's around the country, Cuccinelli could have earmarked the money for the housing crisis. "The Attorney General is a very experienced public servant. He was in the state senate for years. He knows what the legislature is like. He's also a smart lawyer. He knows what the mortgage settlement was about," said Faruk.

In an emailed statement, a spokesperson for Cuccinelli responded. Brian Gottstein says, "66 million coming to the Commonwealth is a large amount of money to allocate, and therefore, in keeping with the separation of powers in government, he (Cuccinelli) felt it was more fitting that the legislature — not the Attorney General — appropriate it."

In the end, lawmakers did have the final say, and Virginia is not alone in how it used the money either. The non-profit investigative journalism team at Pro Publica mapped out how the settlement money was spent across the nation.

14 states diverted the money they got from the settlement to pay down budget deficits or fund programs unrelated to the foreclosure crisis.

California got the most money: $410 million and all of it was used to fill a massive budget hole.

The Attorney General's office also points out that $479 million in direct relief or other benefits was set aside through the settlement for Virginia home borrowers. That money is specifically to help home owners with loan modifications and for abusive foreclosure practices.

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