Georgia congressmen urge state leaders to spend federal settlement dollars on foreclosure prevention

By Maria Saporta

Three U.S. representatives from metro Atlanta — John Lewis, David Scott and Hank Johnson — urged Gov. Nathan Deal and other state officials to ensure that the $104 million awarded to Georgia from the National Mortgage Settlement be invested in foreclosure prevention.

The fact that Georgia had decided to spend those funds on economic development initiatives rather than foreclosure prevention was brought to light in this week’s SaportaReport guest column, written by Kate Little.

The three Congressmen, all African-American Democrats, specifically named the governor, Michael Betty, who is commissioner of the Georgia Department of Community Affairs; and Chris Cummiskey, commissioner of the Georgia Department of Economic Development.

According to a release issued by the three Congressmen on Friday, Georgia had received the $104 million under a settlement with the country’s five largest mortgage servicers after 49 state attorneys general sued those institutions for “negligent foreclosure practices.”

Reps. Lewis, Scott and Johnson had previously written to Gov. Deal on March 12 urging that the funds be dedicated to foreclosure relief. Instead, on March 26, it was announced that those funds had been committed to the state’s Department of Economic Development.

In their June 21 letter, the Congressmen said the funds should be used “to avoid preventable foreclosures, to ameliorate the effects of the foreclosure crisis, and to enhance law enforcement efforts to prevent and prosecute financial fraud.”

They also urged the governor, Beatty and Cummiskey to make “the most appropriate use of resources to meet the description in the consent judgments would begin with housing counseling services and legal aid.”

In a statement, U.S. Rep. John Lewis (D-Atlanta) said: “I cannot understand how an elected representative with millions available to him in these hard economic times, would not use that money to ease the burden foreclosure has placed on thousands of Georgians. We understand some states have decided to divert these necessary funds and use them for other purposes, but we are appealing to the governor to apply these resources to services the people in one of the hardest hit states desperately need.”

U.S. Rep. David Scott also remarked how Georgia had led the nation in foreclosures in May.

“The state economy will not improve unless we can stabilize neighborhoods and bring back property values,” Scott said. “For example, teachers and school employees are being laid off due to dropping property tax revenues. Using these settlement funds for other projects is ignoring the core economic problem in suburban Atlanta.”

Rep. Johnson also re-enforced the point by saying: “These funds should be used to relieve the suffering of Georgia’s homeowners, period. Any other use violates the public interest and the spirit of the consent judgment.

Note to readers: In the next week or so, Cummiskey will be writing a guest column for SaportaReport on this topic.

Maria Saporta, Editor, is a longtime Atlanta business, civic and urban affairs journalist with a deep knowledge of our city, our region and state.  Since 2008, she has written a weekly column and news stories for the Atlanta Business Chronicle. Prior to that, she spent 27 years with The Atlanta Journal-Constitution, becoming its business columnist in 1991. Maria received her Master’s degree in urban studies from Georgia State and her Bachelor’s degree in journalism from Boston University. Maria was born in Atlanta to European parents and has two young adult children.

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