N.C. Senate would divert $8 million in mortgage settlement money

Two weeks ago, the N.C. House indicated it was willing to divert money intended to help homeowners to plug budget gaps. Today, lawmakers in the state Senate showed they're on the same page.

In its version of the state budget unveiled today, the state Senate recommends using about $8 million given to state agencies from the blockbuster mortgage settlement negotiated with the country's largest mortgage servicers to shore up shortfalls.

The House had only recommended diverting about $7.5 million.

The vast majority of the Senate's total would come from the N.C. Housing Finance Agency. The agency was given about $30 million from the mortgage settlement for housing counselors and legal representation for struggling homeowners going through foreclosure. The state Senate recommends cutting $7.9 million from its budget, and suggests the agency use mortgage settlement money to plug the gap.

The state Senate also reduces $200,000 from the state Conference of District Attorneys, which received about $7 million for increased prosecution of financial crimes.

The $26 billion mortgage settlement with Bank of America Corp., Wells Fargo & Co., and three other servicers was approved in April.

North Carolina will receive about $338 million in total. About 80 percent will go directly to homeowners in the form of principal reduction for homeowners who owe more than their homes are worth, small payments to people who already have lost their homes to foreclosure, and other foreclosure prevention programs.

The state will receive the other 20 percent, about $64 million. About $10 million had already been scheduled to go to the state’s general fund and $6 million for the public school system.

Be sure to read this story for more background.