Swept away: AZ Legislature takes money meant for homeowner aid

Thousands of Arizonans who thought they were getting help with their housing problems may be out of luck.

The $15 million left in Arizona's share of the National Mortgage Settlement was taken by the state Legislature last week, swept into the general fund. More than a dozen housing non-profits are now scrambling to find ways to help people who were waiting or even approved to receive aid from the fund.

This isn't the first state-budget sweep of money that was given to Arizona to help compensate for bad and even illegal practices during the housing crash. About $50 million of the $98 million Arizona was allotted from the $25 billion settlement from the biggest lenders went to offset state budget shortfalls in 2013.

"Housing is taken for granted in Arizona," said Patricia Duarte Garcia, CEO of the Arizona housing-aid group Trellis, formerly called Neighborhood Housing Services. "There's a lot of important focus on what the budget did to education, but we have to remember children need a stable place to live first."

Spending the mortgage settlement to help Arizona residents in need of housing help hasn't seemed to be a high priority for most of the state's lawmakers or former Attorney General Tom Horne, who was in charge of disbursing the funds.

Last summer, Arizona Republic reporter Ronald J. Hansen and I reported that after having control of $49 million in mortgage-settlement funds for almost two-and-a-half years, Horne's office had only spent about 28 percent of the money.

While the state prosecutor's office held onto the money, more than 30,000 Arizonans lost their homes to foreclosure.

When the state's mortgage settlement money was finally distributed to housing non-profits in late 2013, Garcia's group created the Arizona Mortgage Relief Fund.

The fund helps people with hardships such as:

-- Making their mortgage payments.

-- Modifying home loans that were unfairly or illegally denied to them.

-- Struggling to keep houses because of bad loans.

-- Trying to buy after an unfair or illegal foreclosure.

Trellis has helped a few hundred Arizona homeowners and buyers with mortgage settlement money so far but had planned to provide funding and counseling to at least 700.

Garcia told me no one knows yet if people who are in the pipeline and approved to receive aid from the program will get it now or what will happen to the many people who have submitted applications for help.

Attorney General Mark Brnovich's office is currently working on ways to at least fund mortgage settlement contracts with nonprofits, including Trellis, through the rest of this year.

"We knew the Legislature was looking at the mortgage settlement funding again, but we didn't expect to lose this much," said Ryan Anderson, director of communications for the attorney general. "Simply pulling the plug on these programs will have damaging results."

A dozen other Arizona non-profits also have housing and employment programs up and running that were being funded with mortgage-settlement money.

Marie Sullivan, CEO of Arizona Women's Education and Employment, said her group has a waiting list with at least 120 people hoping to receive help getting a job to keep a house through a mortgage-settlement-funded program.

Her group recently worked with a mother of three who was divorced, unemployed and about to lose her home to foreclosure.

Sullivan said the program helped the woman train for a real estate license, overhaul her resume, find a full-time job and keep her house.

"Sweeping the mortgage settlement funds will put others like (her) at great risk," said Sullivan, who didn't disclose the woman's name for privacy reasons. "I need someone at the Legislature to look me in the eye and tell me how sweeping those funds balances against the good they are doing for families across Arizona."

A few other of the 49 states to receive mortgage settlement funds used the money for other purposes. But those states did it right away, before any housing or employment aid had been established with the funding.

Now in Arizona, we not only have people who need housing aid. We have people who need housing aid, and until last week thought they were going to get it.