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Californias Mortgage Fraud A judge says the state misused settlement cash to fi
| beady-eyed trump supporter | 07/16/18 |
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Date: July 16th, 2018 5:01 PM Author: beady-eyed trump supporter California’s Mortgage Fraud A judge says the state misused settlement cash to fill a budget hole. California’s Mortgage Fraud PHOTO: FREDERIC J. BROWN/AGENCE FRANCE-PRESSE/GETTY IMAGES By The Editorial Board July 15, 2018 6:44 p.m. ET 173 COMMENTS Americans can be forgiven for forgetting what happened last week, let alone six years ago given today’s media blitz on all things Donald Trump. But it is worth remembering Obama-era abuses of power that, far from this week’s headlines, are having their day in court.
At issue is an April 2012 settlement that 49 states and the federal government reached with the country’s five largest mortgage servicers: Wells Fargo , Ally, Bank of America , Citigroup , and JPMorgan Chase . The idea was to hold banks accountable for their role in the 2008 mortgage crash, and the five doled out more than $20 billion to homeowners and $2.5 billion directly to states in the name of principal reductions, refinancing programs, and other crisis recovery.
Republicans controlled the House, so the Obama Administration used enforcement power to extort money from the lenders to provide what amounted to political stimulus spending. We wrote at the time that this was an election-year raid ripe for abuse in state capitals.
Well, what do you know. Last week California Third District Court of Appeal Judge Andrea Hoch rebuked state lawmakers for misappropriating funds from the National Mortgage Settlement Deposit Fund for budget triage. California’s Department of Finance, with the Legislature’s tacit consent, diverted nearly $300 million toward servicing debt for housing bonds. This overtly political use was in violation of the settlement that required the funds be used to help homeowners. The victims of this raid were low-income and minority communities.
As Judge Hoch explained, the state’s actions raise serious doubts “not only as to whether the Legislature may override a federal judgment, but also whether the Legislature constitutionally may delegate to an agency the authority to decide how millions of dollars of state funds shall be spent with virtually no guidance or direction from the Legislature.”
Judge Hoch ordered the state to return $350 million and rightly dismissed complaints of judicial overreach. Because the settlement originated in the courts, judges are responsible for imposing accountability.
The mortgage heist was dubious on the merits, whacking private banks for the blunders of Fannie Mae and Freddie Mac . Another mistake was pretending that a court-approved bank handout would escape California’s political spending maw. The only surprise is that this time the politicians didn’t get away with it. |