Many states are using money from a $2.5 billion settlement with major mortgage lenders -- meant to alleviate the housing crisis -- to plug budget holes, fund pet projects, or promote economic development. Instead of for the intended purpose, states have tapped at least $1 billion for non-housing related initiatives.
Texas, Arizona, Georgia, Kansas, Nebraska, and Virginia are among the states that have used the money for purposes other than providing mortgage relief. The $2.5 billion is in addition to $51 billion in relief that Bank of America, Citigroup, JPMorgan Chase, Wells Fargo, and Ally Financial will provide to homeowners to settle states' charges of using improper mortgage practices. However, states will not have a role in providing this money to homeowners.