Nine months after securing $132 million in national mortgage-settlement cash, NY Attorney General Eric Schneiderman has steered more than half of the money to housing, counseling and legal services for troubled New York homeowners.
That stands in stark contrast to states such as California and Arizona, where legislators have grabbed much of their funds — from a $25 billion national settlement with five large banks over foreclosure abuses — to fill other needs.
Schneiderman began by doling out $15 million to local housing groups from April 1 to Oct. 1, after federal stimulus money ran out.
Housing and legal-services groups then had to apply for additional funds from the AG’s office, which recently announced $20 million for 35 legal-services organizations and 59 housing-counseling agencies to provide free foreclosure-prevention help. That’s the first round of a projected $60 million in such financing over three years.
Sources close to Schneiderman’s office told The Post he is reaching out to groups around the state for ideas on how to use the remaining funds to help borrowers in trouble. One source said the AG wants to do “something significant,” and the money will not be siphoned off by Albany lawmakers.
“New York’s share of the national mortgage settlement will ensure that families have legal and housing services to fight wrongful foreclosures,” said a spokesman for the AG.
Critics say the national mortgage settlement fails to hold bankers accountable for the fraud at the core of the crisis.
“This was a big potential source of leverage that the state attorneys general and the federal government had to get principal modifications,” said financial expert Yves Smith. “Instead, they traded that out.”