Lawsuit filed to stop transfer of mortgage settlement money

May 24, 2012

Housing advocates filed a lawsuit Thursday in Maricopa County Superior Court. They want a judge to stop the state from taking $50 million from a mortgage settlement to help balance the budget. From Phoenix, KJZZ’s Mark Brodie reports.

MARK BRODIE: Arizona was part of a multi-state settlement announced in February against five big banks. Of the money the state received, $97 million was set aside to prosecute mortgage fraud, and reduce preventable foreclosures, among other things. But last month, state lawmakers and Governor Brewer signed off on a new budget that takes $50 million of the $97 million into the general fund. Supporters of that transfer argued the settlement allows the money to be used to ameliorate the effects of the foreclosure crisis, and that the $50 million is a small part of what Arizona had lost because of that. But Valerie Iverson, Executive Director of the Arizona Housing Alliance, doesn’t buy that interpretation.

VALERIE IVERSON: If the state wanted to really help get the state back on its feet and get its economy back on its feet, then the best way to do that would be to address this foreclosure problem head on, use these monies as they’re supposed to be used, to help people stay in their homes and to help communities to recover from the foreclosure crisis.

BRODIE: The lawsuit was filed by public interest law firms, on behalf of two distressed Valley homeowners.