Wisconsin is supposed to get $140.1 million in the national settlement with banks in a lawsuit over the foreclosure crisis. Gov. Scott Walker has decided to use $25.6 million of that to plug the state budget deficit.
So where is the other $114.5 million going?
According to the Dane County Foreclosure Prevention Taskforce, the settlement is being divided into four pots, only one of which the state had an opportunity to dip into.
Wisconsin's share breaks down like this: $60 million is going to help reduce loan principals for homeowners who are in default or at risk of default; $31.3 million will help homeowners who are current on their payments but owe more than their house is worth, to help refinance their loans; and $17.2 million will be distributed to people who were foreclosed on after Jan. 1, 2008, and lost their homes.
That leaves $31.6 million to be used by the state as it sees fit. Gov. Scott Walker and Attorney General J.B. Van Hollen have decided to use $25.6 million of that money toward the general budget, arguing that the whole state suffered from the crisis. The state is also giving $2 million to programs administered by the Wisconsin Housing and Economic Development Authority. Other money will be used to boost enforcement of mortgage fraud.
Ellen Bernards, a member of the Dane County Foreclosure Prevention Taskforce, says it's a lost opportunity to help neighborhoods. "If you have a neighborhood with a significant number of distressed houses that are bringing property values down, the money could be used by nonprofits to renovate the houses."
Bernards urges people who are struggling with their mortgage not to count on the settlement. "There's no guarantee when money is going to come through, what's going to come through, or to whom it's going to come to," she says. "If they're at risk of falling behind on their mortgage they need to be seeking as much help as possible from as many places as possible right away."
Occupy Madison is holding a seminar on dealing with foreclosure from noon to 4 p.m. on March 18 at Centro Hispano, 810 W. Badger Rd. For more information call Allen Barkoff at 608-231-3015 or email firstname.lastname@example.org. The Dane County Taskforce offers a similar session from 11 a.m. to 1 p.m. on March 1 in the City-County Building.