Attorney General Pam Bondi is asking the public how the state should spend hundreds of millions of dollars from Florida's share of the national robo-signing settlement. Here's the answer: Send it to legal aid organizations and the court system. What the state should not do is follow the path of some other cash-strapped states and use the windfall to help close a budget deficit. This money is supposed to compensate for the harms caused by mortgage banks who used low-level workers to create fraudulent legal documents in foreclosure cases. Homeowners and the courts - the victims of that fraud - should reap the benefits.
When the landmark robo-signing settlement was announced earlier this year, five of the country's biggest banks promised to spend $25 billion - $8.4 billion in Florida - to help underwater and delinquent homeowners by modifying mortgages, writing down principal and other steps. Ten percent of the settlement, or $2.5 billion, was to go to the federal government and the states that participated in the form of cash, with the idea that it too be used to help homeowners. But an investigation by the online newsroom ProPublica, which is tracking the money state by state, indicates that much of the cash is being diverted to address budget deficits instead.
Missouri is using almost all its $39 million to fund higher education that was facing cuts. Georgia directed its entire $99 million to attract new business. And Virginia put all of the $66.5 million it received into the state's general fund. An effort by the state's Democrats to direct the funds to foreclosure prevention was voted down.
Florida is putting 10 percent of its $334 million cash share into the general fund as a civil penalty, something Bondi negotiated - an acceptable amount. But the remainder has yet to be committed, and Bondi is soliciting suggestions.
Direct homeowner relief wouldn't be the best use. Three hundred million dollars wouldn't go terribly far in a state where nearly half of all homeowners are underwater. What makes more sense would be to divvy a portion of the money among legal aid organizations in foreclosure-slammed communities. The money would be designated for lawyers and counselors to help homeowners defend against foreclosure actions and interact with banks in seeking loan modifications. It could also ease the impact of Gov. Rick Scott's unjustified veto of $2 million appropriated by the Legislature this year for legal services to the poor.
Funds should also go to the state's court system to pay for extra senior judges and case managers to handle foreclosure actions. Foreclosures are increasing after a drop off during the height of the robo-signing scandal. And the additional resources would recognize that the fraud perpetrated by the banks made more work for the courts by undermining the veracity of legal filings. This is where the extra money would do the most good, while best reflecting the purpose of the settlement.