Virginia is getting more money from a national settlement stemming from the foreclosure crisis. The Virginia General Assembly will be getting $3.5 million from a settlement over “robo-signing” and “surrogate signing” of mortgage loan default servicing (aka foreclosures). This money is supposed to be used for housing, but the Virginia General Assembly now gets to decide where and how to spend this money.
Robo-signing was a significant problem in Virginia that raised serious questions about the sanctity of property rights in the Commonwealth. It was such a serious concern, that a community group in Northern Virginia organized citizen volunteers to investigate this problem in Prince William County.
This is the second time Virginia will receive a multi-million dollar settlement related to the foreclosure crisis. Last year, Virginia received $66 million from the National Mortgage Settlement. This money was supposed to be used for housing. Unfortunately, the Virginia General Assembly did not invest the money in housing, instead the GA used the vast majority (roughly 90%) of the settlement to fill routine budget shortfalls. Only $7 million was allocated to housing via the newly created Virginia Housing Trust Fund. While we are grateful that some of this money was invested for housing, this was a once in a lifetime settlement (it was second, only to the big Tobacco company settlement)!
Attorney General Ken Cuccinelli sent this letter to legislative leaders, stating:
As I noted when I turned over the more than $66,000,000 paid directly to the Commonwealth as a result of the National Mortgage Servicing Settlement, I gave up the right to appropriate money when I left the General Assembly. However, given that a significant portion of the funds to be swept are related to settlements tied to housing issues, I respectfully request that you consider utilizing some portion of the $3.5 million LPS settlement to address housing issues.
For the sake of Virginian’s families and local governments still struggling with housing issues related to the foreclosure crisis, my sincere hope is that the General Assembly utilizes all of this settlement for housing.