Church, Housing Groups Sue Gov. Brown Over Mortgage Settlement Money

March 14, 2014
Los Angeles Times 
mortgage lending news
Several religious groups and homeownership advocates are suing California Gov. Jerry Brown, demanding that he return about $350 million from California's share of the 2012 national mortgage settlement. Although the money was pledged to help distressed homeowners and fund consumer protection programs, Brown diverted it to pay interest on low-income housing bonds due to a $16 billion state budget deficit. California is now projecting a budget surplus of more than $4 billion, so housing advocates are calling for the money to be funneled back into mortgage relief and counseling programs.

“Our goal is a very simple goal,” said Robert Gnaizda, general counsel for the National Asian American Coalition, one of the plaintiffs. “We want an early settlement that will help 2 million California homeowners who are still in distress.”

After the suit was filed on March 14, Brown's office gave no indication of changing course. California Attorney General Kamala Harris is now placed in a difficult situation. She helped negotiate the mortgage settlement and criticized Brown's move to divert the counseling funds at the time. As the state's top prosecutor, however, she will be charged with defending the suit.

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