Brown sued for diverting mortgage settlement millions
March 14, 2014
• Apparently moved $369 Million into the General Fund
• “The Governor had no legal right to divert these funds”
California Gov. Jerry Brown supposedly “promptly — and, indeed, unlawfully” diverted most of the $369 million the state got in 2012 from a settlement with five of the nation’s largest mortgage servicers into the state’s General Fund and has yet to replace it, says a lawsuit filed Friday by housing advocacy groups.
The money, the lawsuit says, was supposed to give California homeowners the necessary counseling and assistance to save their homes from foreclosure, among other similar purposes.
The lawsuit says Mr. Brown has no apparent intention of reconstituting the special fund unless he’s forced to by court order.
“There is no question that the $369 million at issue was required to be deposited into a Special Deposit Fund. There is no question that this sum was supposed to be devoted to the specific purposes for which the Special Deposit Fund was created, as expressly recited in the pertinent settlement documents co-signed by the California Attorney General’s Office. There is no question that most of the money was instead diverted to the state’s General Fund to pay off the state’s general debts,” says the petition filed in Sacramento County Superior Court.
“The Governor had no legal right to divert these funds in the first place and, even if he did, he certainly has the statutory duty to replenish them in this year of surplus,” the filing says.
Filing the lawsuit are the National Asian American Coalition, a HUD-approved homeowners counseling organization; COR Community Development, Corporation, affiliated with Christ Our Redeemer African Methodist Episcopal Church; and the National Hispanic Christian Leadership Conference, which describes itself as the largest Latino Christian organization in America, with 6 million members.