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Scott signs mortgage relief bill, but are banks cooperating?

Florida Gov. Rick Scott signed a bill Tuesday that will distribute $200 million in mortgage relief and vowed the new law would hold banks accountable so homeowners are better shielded from foreclosure abuses.

“Banks will now be held accountable and Florida families will be protected with new protections for homeowners,’” Scott said while flanked by Attorney General Pam Bondi and state housing officials.

Yet as Scott signed SB 1852 into law, questions are emerging about whether the banks who signed the deal are complying with the agreement, the latest setback in a relief package already delayed by months of negotiations.

“I’ve had issues with the banks,” Bondi told reporters. “I was on the phone Friday or Saturday with (Shaun Donovan, the secretary of U.S. Department of Housing Development) telling him personal stories of people I’ve had contact with, who have had problems ... I’m telling him first-hand stories that I’m hearing with various banks.”

Attorneys general in North Carolina, Illinois and New York have said that the banks aren’t complying with the agreement. Bondi’s office said that it has received 293 complaints of possible violations of the agreement and is reviewing each one. But unlike attorneys general in other states, particularly New York Attorney General Eric Schneiderman, Bondi stopped short of threatening more legal action.

Schneiderman has threatened to sue Wells Fargo and Bank of America because he’s concerned they are purposely delaying processing homeowner requests for lower mortgage payments.

“Eric Schneiderman can say he’ll sue all day long, but there’s a process that you go through first,” Bondi said. “There are stringent provisions under this settlement process, and we’re doing everything to hold the banks accountable.”

For now, Bondi said, the monitor of the national settlement, Joe Smith, should review the complaints that suggest banks aren’t complying.

Florida is one of the last of 49 states to distribute the cash they received as part of a $25 billion settlement reached last year between the attorneys general and the nation’s five largest mortgage servicers: Wells Fargo, JP Morgan Chase, Bank of America, Citigroup and Ally Financial.

Florida’s total take was $8.4 billion, most of which will be spent by banks on writedowns and mortgage modifications. But, as part of the settlement, the state received $334 million in cash in April, where it sat in an escrow account until Bondi and lawmakers agreed how to spend it.

Initially, Bondi argued that the money didn’t need to go through the Legislature. Lawmakers insisted otherwise. The delay caused Florida to lag behind other states in distributing the money.

In October, an affordable housing group in Washington, Enterprise Community Partners, said Florida and Texas were the only states that still hadn’t determined how to spend the cash. Bondi and lawmakers reached a preliminary agreement the following month. Under the deal, $60 million would be spent immediately on down-payment assistance and legal counseling and $73 million would be diverted into the state’s general fund budget, allowing it to be spent on items unrelated to housing.

How to spend the remaining $200 million was decided during the legislative session that ended May 3 and was outlined in SB 1852.

The windfall that Scott signed Tuesday pays for an assortment of programs and services, including: $60 million for the State Apartment Incentive Loan program, which will pay for rental units for the elderly and those with disabilities; $40 million for the State Housing Initiative Program, for cities and counties to help struggling homeowners repair and keep their homes; $29 million to courts to whittle down the backlog of foreclosure cases; $20 million for Habitat for Humanity; $10 million for domestic violence shelters; $10 million for a grant program for housing for the homeless; and $9.1 million to Take Stock in Children to buy prepaid dorm rooms for scholarship students who qualify for aid.

Bondi defended the additional money for the courts, which some criticize as a measure that will only make it easier to foreclose homes.

“There is a tremendous backlog,” Bondi said. “We have to do everything we can to get rid of that backlog, but it has to be under stringent guidelines.”