State Reps Intro FAIR Act to Direct Foreclosure Funds to Homeowners

Rep. Cory Mason (D-Racine) and Rep. Tamara Grigsby (D-Milwaukee) say they want money to go to homeowners and not to plug a hole in the state budget.

Saying the entire pot of $140 million national foreclosure funds should go to Wisconsin homeowners and not to help plug a hole in the state budget, state Democratic Representatives Cory Mason and Tamara Grigsby introduced legislation to make it happen.

Called the FAIR Act (Foreclosure Aid, Integrity, and Relief), the bill would force Governor Scott Walker to use some $25.6 million to help homeowners across the state.

According to a story on Forbes.com, Wisconsin's share of a $25 billion settlement with five of the largest banks that participated in illegal mortgage practices will be $140 million. $31 million of that money is marked for the state to help fund "future law enforcement efforts, providing additional relief to borrowers, paying civil penalties, funding of foreclosure relief programs and to compensate the state for its losses from the crisis."

But WBAY in Green Bay reports the decision to use $26 million of that $31 million to help plug a projected $143 million hole in the state budget was made by Attorney General J.B. Van Hollen in consultation with Walker. The Governor reportedly said that state finances have been affected by the mortgage crisis so using the funds in this manner is appropriate.

In a written release, Mason said, "The middle class families in Wisconsin who are dealing with the foreclosure crisis have already been ripped off once by Wall Street. I will not stand by and let them be ripped off again by Scott Walker.”

FOX 6 News quoted Cullen Werwie, press secretary for the Governor's office as saying, "Governor Walker supports allocating the funding from the banks based on the terms contained in the settlement. The vast majority of funding from the banks will go to Wisconsin homeowners.”

But Mason and Grigsby don't agree with this reasoning. Their FAIR Act pushes that $25.6 million into programs to help victims of the foreclosure schemes and to help fund programs for tenants and veterans awho might be facing foreclosure and homelessness.

“Scott Walker’s raid of these funds takes money right out of the pockets of families hit hard by the foreclosure crisis,” said Mason. “The legislation Rep. Grigsby and I are introducing will ensure that the funds received from this foreclosure settlement are used for their intended purpose: preventing additional foreclosures and assisting those Wisconsin homeowners whose lives have been upended by foreclosure.”

Both representatives are hoping for bipartisan support for what they call "this common sense proposal."

Heather Asiyanbi (Editor) February 15, 2012 at 09:15 PM
@Hoffa & everyone else who feels that most of the homeowners who would/could benefit from the settlement are undeserving - how do you know this? How do you know there aren't bunches of homeowners who did the right thing, bought within their means and then through no fault of their own lost their jobs when the Great Recession hit and now owe $10K or more than their homes are worth? I would bet good money I don't have (ha!) that this is probably more the norm than the exception. Also - let's not forget that there would be no settlement if the banks hadn't acted with malfeasance. Why are we only pointing the fingers at homeowners?
Rees Roberts February 15, 2012 at 09:37 PM
Heather Asiyanbi, when you are right you are so right. Your comments show understanding, balance, empathy and common sense all with the ability to say it with civility while being informed. I applaud you. We are lucky to have you as our editor. And no, I'm not looking for brownie points. I just think she has a real gift with the English language.
James R Hoffa February 15, 2012 at 09:40 PM
@Heather A - I commend you for thus far being the only person on this board to articulate a logical supporting position in favor of Mason and Grigsby's proposed use for the money. If there were extremely strict qualifying guidelines in place, basically requiring that the in trouble homeowner demonstrate: 1) that they are doing their best to help themselves, like working 2 or 3 part time jobs, etc.; and 2) that they haven't engaged in exhorborant financial irresponsibility that led to their present situation, such as putting a line of credit on the house to buy a new car, boat, take luxury vacations, etc.; then maybe we'll be getting somewhere, but we still won't be out of the woods just yet. My biggest problem with this plan is that it doesn't contain a payback provision. Once the homeowners that are helped are once again on their feet and solvent, then they should have to payback the assistance they received to the collective taxpayer, as that would be the fairest solution across the board, right? But the proposed plan doesn't do either of these two things. Instead, it's a handout that's being given on the backs of those that always have and continue to do it the financially responsible way. Why can't Mason and Grigsby come up with a fairer and just plan if they honestly want us to take it seriously?
morninmist February 15, 2012 at 09:52 PM
Thank you Reps for introducing this bill. You can be sure that the victims of the greedy bankers appreciate your efforts. ThinkProgress @thinkprogress Gov. Scott walker to use foreclosure settlement money to balance his budget, not help homeowners thkpr.gs/w0qkDp #wirecall
C. Sanders February 15, 2012 at 10:03 PM
There are many more people, which is the norm, that pay their mortgage inspite of the current market value of their property. Someone loses their job AND finds the market value of their home is $10,000 less than their mortgage does not establish any fair basis for that homeowner to get preferential treatment over ANY other homeowner, no matter their circumstances. If that should be the case, there are already many social service, church and charitable organizations that can provide life sustaining support. Everyone had the same opportunity, offer and agreement to take on a mortgage for their home, and it is not the role of the local, State of Federal Government to pick winners and losers for preferential treatment to receive financial support to mitigate the book losses of one homeowner over another, or to supplement one homeowner's cashflow to pay their debt over another hoimeowner that may have decided to work a second job to stay afloat. We can blame the banks all we want, but the fact is the Federal Government always and continues to have within its means the ability to prosecute any bank executive, or Fannie/Freddie exec or even any investment banking exec of any crime committed related to the mortgage meltdown. The Feds have not choisen to pursue criminal charges, but rather demonize the aforementioned for political purposes while concoting a plethora of bailout programs that miss the mark.
Brian Dey February 15, 2012 at 10:05 PM
Sorry to have used a blanket statement. My point is that no matter what is going on in today's society, blame seems to be the first thing anyone thinks of. Rees, you are right, and inflammatory remarks need not be used to make a point. But I will say this. I moved to Caledonia 25 years ago. From Drexel Av to Ryan Rd in Oak Creek, there were very few homes. From 6 Mile to 4 Mile Rd, there were very few homes. Starting in the early 80"s and continuing through the mid 2000's, subdivision after subdivision went up, and not with modest homes, but homes valued anywhere from $200,000 to $350,000. My first home in Crestview cost me $50,000 and when I sold my second home in Crestview, a mere 12 years later, it sold for $123,000. It was not a $123,000 home, and today these homes, even in this mortgage market, they are selling for close to $150,000. When the subdidvisions were going up, I couldn't believe that there were that many people making that much money to afford these expensive homes. And because of what was being built, the homes in Crestview were getting way more than they were worth because there was a limited amount of single family ranch homes in the area. I will not say all that are in foreclosure did so without heartache and good intentions. I would even say most thought that they could afford those homes. But right now, the divide comes because there are so many hurting, asking them to ante up just piles on to that.
Rees Roberts February 15, 2012 at 10:18 PM
C. Sanders You said "Everyone had the same opportunity, offer and agreement to take on a mortgage for their home..." Maybe I am missing something but when I read Heather Asiyanbi's comment which read "How do you know there aren't bunches of homeowners who did the right thing, bought within their means and then through no fault of their own lost their jobs when the Great Recession hit and now owe $10K or more than their homes are worth?" Did those people Heather spoke of have equal opportunity, offer and agreement to take on a mortgage when those mortgages were offered by banks who acted with proven malfeasance, after the fact? Is that kind of opportunity fair? Is that the kind of opportunity we want in this country? Good grief. If the nature of our business contracts are anything goes, even if it is illegal, and gawd you had better have known ahead of time what the bank's intentions were? Is that the kind of opportunity you believe in? Think about it. I want better for us. I would hope you would too. Sincerely.
C. Sanders February 15, 2012 at 11:09 PM
Rees Roberts Malfeasance is a crime, generally by a public official. Not aware of any bank executive that has been charged with malfeasance that either acted alone or in concert and on a national basis to commit a crime against the public. Do you?
Rees Roberts February 16, 2012 at 12:22 AM
This looks like a good link to read. It appears civil charges are being looked into. So, maybe not criminal but, as it says in the article, "if it talks like a duck, walks like a duck, it must be a duck." What do think? http://dealbook.nytimes.com/2011/12/19/closer-look-at-s-e-c-s-mortgage-fraud-charges/
mau February 16, 2012 at 01:35 AM
It's all eye wash and political grand standing. It's not right but both parties are guilty as charged. Thing is, it's in a recall season, so of course the democrats are going to make this into a political issue. 2003: Wisconsin's $5.9 billion settlement in the national tobacco lawsuit sold 25 years of tobacco payments for $1.3 billion upfront to balance a single year's budget. 2007: Doyle took $200 million out of a fund paid in to by doctors in order to partially plug a budget hole.
C. Sanders February 16, 2012 at 02:46 AM
Some estimates report the loss in property values in the US real estate market at $20 trillion. If so, then that number exceeds the size of the entire US debt. There are obviously no winners that come out of this, there are only those that lost less than others, and mortgage bailouts are politically expedient, at best.
Heather Asiyanbi (Editor) February 16, 2012 at 03:44 AM
@Hoffa - the money is not state money funded by taxpayers. The BANKS are paying out and Mason and Grigsby just want to be sure Gov. Walker isn't using any of that money to plug holes in the state budget instead of using the money as it was intended, which is, of course, to help homeowners and residents who have been negatively affected by the policies and practices of the banks.
Heather Asiyanbi (Editor) February 16, 2012 at 03:52 AM
@mau - well, it kind of is a political issue, isn't it? Anytime a Governor uses settlement money to plug the budget they turn it into a political football. And no, I don't care from what party the Governor hails.
mau February 16, 2012 at 04:04 AM
Agreed. That's why I showed an example of both parties doing it. And like yourself with the party you support, this isn't enough to sway my support for Walker.
Heather Asiyanbi (Editor) February 16, 2012 at 04:07 AM
@Rees - thanks for the kind words. But really, you said it best by pointing out how the playing field really wasn't equal. Even when responsible homeowners do everything they're supposed to do yet they fall not just victim to the recession, but also to unscrupulous lending practices and bundles of whatever sold to lots of whomevers ... well, that's just not right no matter how you slice it. And whether or not what the banks did can truly be classified as malfeasance is really not the point, is it? But I would classify what they did as a national crime against the public.
C. Sanders February 16, 2012 at 04:46 AM
Have recently wondered, what's worse? A journalist that's a liberal or a liberal that masquerades as a journalist. How about a journalist that's a conservative or a conservative that masquerades as a journalist.
Heather Asiyanbi (Editor) February 16, 2012 at 04:49 AM
I mistakenly deleted someone's comment ... Soooo sorry! I will try to get it back.
Heather Asiyanbi (Editor) February 16, 2012 at 04:50 AM
$20 trillion is ... Unfathomable. Wow.
Heather Asiyanbi (Editor) February 16, 2012 at 04:58 AM
I am sorry to report a epic FAIL in locating the comment I deleted on accident ... I am almost positive it was from C.Sanders. Please accept my apology ... Not the intent! I was trying to tap the reply button for the comment directly above.
C. Sanders February 16, 2012 at 05:04 AM
If it was mine, not a problem. It would only have annoyed someone and at this late hour, let's invite everyone to have a pleasant sleep.
C. Sanders February 16, 2012 at 05:08 AM
Yep. It was my post that was deleted. A unintended literary abortion, of sorts. Pleasant dreams.
Rees Roberts February 16, 2012 at 05:12 AM
If you can recall something from the posting I could share it. Actually anyone who follows the thread via email would have it. I would merely take your recollection and see if I could find it. I would then merely share it again. But maybe Heather could do that too. I dunno.
C. Sanders February 16, 2012 at 05:17 AM
The post spoke of my real concern with the use and lack of oversight on derivative products that leveraged a mortgage value at a rate of 30 to 1 with marketable securities.
Rees Roberts February 16, 2012 at 05:44 AM
C. Sanders: Was this the post? "Rees Roberts That's a good link that describes how the SEC gas charged former Freddie Mae and Fannie Mac execs with some charges. As you know, Fannie and Freddie are Government-sponsored enterprises. They clearly did the bidding of select lawmakers like Barney Frank and Chris Dodd to relax lending standards in order for damn near everyone to live the American dream ... Homeownership. While I may have serious issues with Fannie, Freddie and ilk like Frank and Dodd, the whole house if cards collapsed as a result of the derivative products that were invented and traded that leveraged a mortgage at the rate of 30 to 1. That means that a $100,000 mortgage had marketable securities valued at $3,000,000 theoretically linked to the mortgage. So, when the $100,000 mortgage defaulted, $3,000,000 of marketable securities went with it. WHAM!!!! Multiply that across the US real estate market and you have a financial Armageddon. Where was the SEC oversight? Where was Congressional oversight? Where were the CPA firms that audited Fannie, Freddie? They got caught up in the wave that they never believed would never reach shore. So, the numbers are astronomical and mortgage bailouts are a drop in the bucket designed for political expediency and agendas. IMHO"
James R Hoffa February 16, 2012 at 06:05 AM
@Heather A - That's where I'm going to strongly disagree with you - it is taxpayer funded money as AIG, Fannie, Freddie, Ginnie, and Sallie, or the housing guarantors/insurers, paid the banks whenever a loan went into default/foreclosure. Because of the massive number of defaults/foreclosures, those agencies had to pay out more money than they had on hand, hence the massive government bailouts and virtual nationalization of the GSEs with taxpayer funds. NONE of those entities has yet repaid a single penny of their taxpayer funded bailouts, with the exception of a small amount from AIG, and in fact the GSEs continue to hemorrhage taxpayers dollars to this very day. Remember, this is all separate from the bank loans that were made under TARP, which a vast majority of banks, and all of those involved in the litigation that produced this settlement, already paid back with interest. In all reality, the banks were paid on their insurance contracts, which 'hedged' their bad loans/bets, with taxpayer funds. Essentially, the money that the banks are now using to settle this lawsuit with is the money that they otherwise would have lost had those insurance contracts been breached, which would have occurred absent the bailouts. So yes, the money being offered in the settlement most certainly belongs to all federal income tax payers. I don't know how you could see it any other way when this is the big picture reality of the overall situation.
C. Sanders February 16, 2012 at 12:47 PM
Rees Roberts Thank you for locating the deleted post. Your kindness is much appreciated.
mau February 16, 2012 at 10:50 PM
Reading comments here and on some of the other blogs, about the evil bankers, wall street, 1% vs 99%, caused me to go back and watch a PBS Frontline special called The Warning. I am by far not a financial expert, in fact my eyes blur over when I try to understand it, but I can tell you, you can not keep using the fox to guard the hen house. Some of the key players (Geitner, Rubin, Summers), who have been involved in the meltdown of our financial system, are or have been on Obama's economic team. This crosses party lines and neither party is going to do anything about it as the money continues to flow into their coffers. The only one who has any serious plans to turn the tide is Ron Paul. PBS Frontline The Warning http://www.youtube.com/watch?v=TtJql2aqjkw Robert Rubin’s disciples dominate Obama economic team http://news.muckety.com/2008/11/24/obama-taps-robert-rubin-proteges-but-they-no-longer-espouse-rubinomics/7391
Heather Asiyanbi (Editor) February 17, 2012 at 12:19 AM
@mau - you are exactly right with you fox watching the hen house statement! We can't have the banking industry policing themselves. Been there, done that and we're not done climbing out of the hole that policy helped create.
Randy1949 February 17, 2012 at 01:03 AM
@JRH -- what about people whose homes were foreclosed on fraudulently? This settlement was to help them too. http://www.huffingtonpost.com/2012/02/07/robo-signing-docx-missouri_n_1261369.html
Jimmy Neutron February 17, 2012 at 01:39 AM
Thanks for posting "The Warning" Mau. I've never seen it, but I have heard about it, and have been wanting to watch it. Brooksley Born had her career buried by Rubin, Summers and Greenspan after she voiced her concern with the derivatives market. Rubin, with the help of keeping the status quo, went on to make $125M at Citi after he left Clinton's team.


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