Georgia leaders bypass metro Atlanta with their allocation of $99 million in federal foreclosure funds

By Guest Columnist KATE LITTLE, president of the Georgia State Trade Association of Nonprofit Developers

In February of this year, the federal government and 49 of the 50 state attorneys general announced that they had reached a settlement regarding foreclosure fraud with the nation’s five major financial institutions: Ally Bank, Bank of America, JPMorgan Chase, Citi, and Wells Fargo.

Known as the National Mortgage Settlement or NMS, the agreement calls for the big banks to provide an estimated “$25 billion in relief to distressed borrowers and direct payments to states and the federal government.”

According to language in the settlement, the direct payments to states should “fund housing counselors, provide legal aid, and other similar purposes determined by state attorneys general.”

Kate Little

However, NMS does not contain any enforcement mechanisms, allowing some states the leeway to use the money for things entirely unrelated to housing and the foreclosure crisis.

Georgia’s share of the settlement totaled nearly $99.4 million.

According to Georgia’s Attorney General Sam Olens, the state’s Constitution requires such funds to be deposited in the general fund with the General Assembly responsible for determining how to allocate the money.

Gov. Nathan Deal and the General Assembly decided in the waning days of the 2012 session to divide the money between the Regional Economic Business Assistance (REBA) and the OneGeorgia Authority.

That means that none of the funds will go to address foreclosures, even though Georgia has consistently ranked in the top five of states across the country with the highest rates of foreclosure.

In fact, just last week, Georgia topped the nation in the rate of foreclosures for May.

Unfortunately for many homeowners facing foreclosure and for communities struggling with how to deal with the proliferation of vacant and abandoned properties, they cannot turn to the state to use these funds on their behalf.

According to a Feb. 20th article in the Atlanta Journal-Constitution, RealtyTrac has compiled data revealing that about one in 328 homes in Georgia received a foreclosure notice in January.

That same article also recommended that struggling homeowners contact a HUD-approved housing counseling agency for help. What the article did not is that many HUD-approved housing counseling agencies are themselves struggling to maintain services and that money from the settlement could help them continue and expand their services.

Several counties in the metro Atlanta area have experienced high rates of foreclosure and contribute to Georgia’s national ranking: Gwinnett leads the pack accompanied by Clayton, DeKalb, and Fulton.

The housing market played a big part in the metro area’s booming economy and so the drag on the market caused by foreclosures has continued to stymie recovery.

In announcing his plans for allocating the NMS funds, Gov. Deal said that the money would be better in supporting jobs to impact the economy, rather than addressing the foreclosure crisis.

However, since the metro area also has been recognized as the economic engine for the state, one could reasonably assume that some of the settlement dollars would make their way here and have an indirect impact on the number of foreclosures.

But then, one would be wrong. Both REBA and the OneGeorgia Authority will use the funds to attract jobs to rural Georgia. The metro Atlanta area will no benefit from this infusion of dollars into the state, even though the amount of funds the state received was calculated in part on the number of foreclosures in here.

According to the REBA website, “REBA is an incentive program that is used to help ‘close the deal’ when companies are considering Georgia and another state or country for their location or expansion.

REBA funds may be used to finance various fixed-asset needs of a company including infrastructure, real estate acquisition, construction, or machinery and equipment. A local development authority must be the applicant for a REBA application and the application must be supported by a recommendation letter from a state agency, typically the Georgia Department of Economic Development.”

According to the One Georgia Authority website, “The goal of the OneGeorgia Authority is to offer financial partnerships with rural communities to create strong economies in all business sectors, allowing new and existing industries, both large and small, to flourish. OneGeorgia is bridging Georgia’s economic divide by ensuring balanced growth across the state helping to guarantee that all Georgians have access to economic opportunities in their own communities.”

As Andy Schneggenburger, executive director of Atlanta Housing Association of Neighborhood-based Developers noted: “There you have it – both programs very specifically target rural areas, and clearly do not return their investments to the communities most heavily impacted by the foreclosure crisis.”

To combat the continuing foreclosure crisis, Georgia needed all of the $99 million spent on helping troubled borrowers stay in their homes and helping neighborhoods and communities to reclaim vacant and abandoned foreclosed properties.

Cities and counties concerned about stopping the encroachment of blight, the creation of public safety hazards, and falling property values could have used these funds to make a difference. Acquisition and rehabilitation of foreclosed properties does create jobs and would have put these properties back on the tax rolls to benefit the bottom lime of local governments.

The allocation of NMS funds to rural Georgia for “job creation” represents a missed opportunity to help Georgia citizens in both urban and rural areas keep living their American Dream.

Kate Little is the president of the Georgia State Trade Association of Nonprofit Developers (GSTAND), a statewide membership organization of nonprofit affordable housing developers based in Atlanta.

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5 comments
gofight
gofight

Frank, in Georgia the foreclosure process is very quick not years at ALL. Georgia is a non judicial foreclosure state oppose to a judicial foreclosure state which can take years to foreclose. In Georgia foreclosure happens a quick as in 4 months. I agree the $99 million should go to restructure the Georgia foreclosure crisis. As always the state of Georgia is slow and behind as a result will be hard to recover.

 

frank
frank

Its is funny how people will go for YEARS living in their homes not paying their mortgage until the banks until the foreclosure process is completed. Most of these people are hard working folks that have lost their jobs. They could afford a lower mortgage payment. Yet the banks would rather take ZERO for three years then sell the house for 75 cents on the dollar as a short sale.

 

Take the $99 million and help folks stay in their homes by restructuring their loan payments.

 

"To combat the continuing foreclosure crisis, Georgia needed all of the $99 million spent on helping troubled borrowers stay in their homes and helping neighborhoods and communities to reclaim vacant and abandoned foreclosed properties."

 

 

K Anderson
K Anderson

Let's hope the local and national media investigates and exposes the Governor and all others involved in this scandalous act of collusion of denial of national funds intended for specific homeowners who have suffered under the mortgage crisis.instead money will be wasted on political cohorts to distribute the money to hire and pay low wage illegals for farmers etc. The end result is Mr. Deal imposing a tax/fee on homeowners to pay for yet another state program. Why shouldthe down and out be swindled out of their fair court settlement? Much of the money should have been distributed to Atlantans whose homes are underwater or have already been foreclosed upon. CITIZENS SPEAK UP AND RALLY TO REMOVE THIS MAN FROM OFFICE BEFORE HE TAKES US ALL TO THE CLEANERS. REPUBLICAND AND DEMOCRATS HAVE BEEN HOSED AGAIN BY THEIR STATE ELECTED OFFICIALS! RECALL NATHAN DEAL NOW!!!

leedart
leedart

The feds should take the money back! Simple, if you don't use the money for the areas it was calculated to help, then just reel it back into the national coffers and make a program for the individual homeowners. So much for the bull message of allowing states to work with their own populations!

Cup_O_Jo
Cup_O_Jo

@richsullivan @mariasaporta Should ignore Atlanta-if you have enough to build a new stadium you don't need any monies.

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  3. […] is using its chunk of the national mortgage settlement to fund two economic development organizations that provide incentives for businesses to move to the state, according to SaportaReport (h/t Think […]

  4. […] is using its chunk of the national mortgage settlement to fund two economic development organizations that provide incentives for businesses to move to the state, according to SaportaReport (h/t Think […]

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  14. […] development initiatives rather than foreclosure prevention was brought to light in this week’s SaportaReport guest column, written by Kate […]

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  16. […] her guest column of June 17, Kate Little, president of the Georgia State Trade Association of Nonprofit Developers, makes two […]

  17. […] Kate Little, the President of the Georgia State Trade Association of Nonprofit Developers wrote today, that money did indeed wind up in the state’s general budget, where it will be spent on corporate giveaways — economic programs meant to entice companies to move to Georgia — rather than helping homeowners. […]

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