Pam Bondi reaches deal on Florida's $300 million foreclosure settlement

TALLAHASSEE — Florida Attorney General Pam Bondi announced Friday that she has reached a deal with state lawmakers over how to use $300 million in foreclosure settlement money that has sat dormant since April as top officials have haggled over who had authority to spend the cash.

Under the deal, most of the money will go to housing-related initiatives as Bondi requested, but the Legislature will not approve specific spending measures for two-thirds of the funds until next year's legislative session.

About $60 million could be approved in the coming weeks for programs like down-payment assistance, legal counseling for struggling homeowners and initiatives to help deal with the backlog of foreclosures in state courts.

The deal allows an additional $40 million to go to state coffers as a "civil penalty," adding to the $33 million that has already been sent to the state treasury for general spending.

The agreement was announced by Bondi, Speaker-designate Will Weatherford, R-Wesley Chapel, and incoming Senate President Don Gaetz, R-Niceville. Both Weatherford and Gaetz are gearing up to take over from the current legislative leaders, who were in charge when the disagreement over spending authority began.

"This plan gets much-needed assistance to the homeowners and communities suffering the effects of the foreclosure crisis, and ensures that the settlement funds are spent with the transparency, accountability and flexibility that comes from the legislative process," Bondi said in a statement. "I thank President-designate Gaetz and Speaker-designate Weatherford for working together with me to implement the mortgage settlement in a way that's in the best interests of our state."

Originally, Bondi argued that the money did not need to go through the Legislature. She said that under the terms of the settlement, she had authority to decide how the cash should be spent. But legislative leaders, including an outgoing budget chairman, disagreed, pointing out that the Legislature had sole legal authority to appropriate state funds.

It took months of backroom negotiations to reach a compromise, and the money has remained in an escrow account since April.

In the end, both sides seemed to get what they wanted. Bondi got a promise that most of the money would go to housing, while lawmakers got to exert control over the spending process and were able to steer $40 million into the state budget.

Homeowners will benefit from new housing programs aimed at helping boost the weary real estate market, but most will not receive any of the aid from the state any time soon.

When the Legislature meets next year, lawmakers are expected to approve up to $200 million in new funding for foreclosure prevention, neighborhood revitalization, affordable housing, home-buyer or renter assistance, legal assistance, counseling and other housing-related programs.

Because the bulk of the money won't be spent until next summer, Florida will remain one of the slowest states to make use of the settlement money, even as it leads the nation in foreclosures. Other states began putting their portion of the settlement to use almost immediately and, as of last month, Florida was the only state that had yet to announce plans for the money.

The $300 million cash payment came in addition to more than $7 billion in direct mortgage assistance that Floridians were set to receive from banks as part of the national $25 billion settlement.

The banks — Wells Fargo, JP Morgan Chase, Bank of America, Citigroup and Ally Financial — agreed to the national settlement after allegations surfaced that homeowners were being foreclosed on with fraudulent documents.

Pam Bondi reaches deal on Florida's $300 million foreclosure settlement 11/02/12 [Last modified: Friday, November 2, 2012 8:58pm]

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