Where Did Our Mortgage Settlement Money Go?
Posted on Feb 10, 2012 in Foreclosure - Saving Your Home, Mortgage Foreclosure Defense, Mortgage Modifications, Wisconsin
As of now, there has been no news from Illinois about the mortgage foreclosure settlement and how funds would be distributed. However, Wisconsin’s Governor, Scott Walker, and the attorney general, J.B. Van Hollen, have announced that $25.6 million of the $31.6 million received would go to fix the budget deficit instead of helping homeowners.
When the states received tobacco settlement money years ago, many states elected to do the same thing. In this case, however, the issue is not one of compensating smokers. After all, paying smokers or the victims of deceased smokers would do little to stop smoking or solve the outbreak of cancer and other health concerns that smoking caused. Paying homeowners, however, or writing down principal on mortgages to reflect the fair value of properties would absolutely have done more for the economy.
Instead of suddenly becoming tight-fisted, allowing homeowners to break even on homes instead of remaining underwater would arguably do more to stimulate spending and restore consumer confidence in homebuying. Instead, the foreclosure crisis will most likely lead to more lost houses and depressed home values until the market bottoms out. This could take years. This certainly won’t be good news for homeowners looking to refinance, to borrow from home equity, or to sell their homes (rental, vacation, or homestead) in the next few years.
Will other states follow Wisconsin’s lead and funnel the money into fixing a budget deficit or attack the foreclosure problem directly by paying down principal and encouraging modifications to stop foreclosures and save the homes of their residents? What role will this have in the upcoming recall elections? Stay tuned for more.