Mortgage settlement should be used for residents

OUR VIEW

By: The Record Editorial Staff | Hickory Daily Record
Published: February 22, 2012

Many people smiled when the attorneys general from several states forced some of the nation’s biggest mortgage lenders to give homeowners billions in relief.

Qualifying homeowners were happy. So were scam artists. And the states that built in loopholes to allow some of the settlement money to be spent for something other than helping the public hurt by bad loans and a staggering housing market were happy, too.

The $25 billion deal includes nearly $2.7 billion for state governments to spend anyway they want. Missouri already has decided to narrow its budget deficit with its share. Other states are looking at the same move.

The argument that cutting state deficits is beneficial to all residents is valid, but the objective of forcing the lenders to free up money for homeowners was to get people out of a financial jam and enable them to keep or regain their houses, negotiate better interest rates, forgive many loans, keep the money flowing between borrowers and lenders, and help maintain homeowners’ spending trends in the overall economy.

But the states that banded together – North Carolina among them – cut a deal that was good for residents with unmanageable mortgages and the state treasuries. It’s like the 1998 tobacco settlement in which participating states spent billions of dollars on projects that had nothing to do with health or stop-smoking initiatives.

Local governments must plan carefully before accepting money from the state or federal government. When that money runs out, the local folks must pick up the tab to keep a project going, equipment repaired and replaced, and continue the salaries of new hires. The alternative is to watch all that go away.

Using the mortgage settlement money to close budget gaps is a short-term solution to a persistent problem of not having enough revenue to cover expenditures. In most states – North Carolina included – the budget crisis was years in the making.

Now, North Carolina hasn’t finalized what it wants to do with settlement money. We think it should be applied to helping residents recover from a brutal economy that was not of their making. The money shouldn’t be used to gloss over budget problems for a year or two.

The final settlement could be approved by the end of the month. Let your legislators and the governor know how you feel about what should be done with the state’s share of the loot.

Watch out for settlement scam

NC Attorney General Roy Cooper warns people of a scam that’s surfaced in other states in which residents are notified they have mortgage settlement money coming and all the caller or emailer needs are bank account numbers.

Don’t fall for the ruse, Cooper urges. Don’t trust anyone except your lender, your financial adviser or your lawyer in this matter. Your lender should not spring a surprise call or email on you.

Beware of an official-looking email document. It’s OK to be suspicious when someone wants personal information though an unsolicited email or phone call. Check it out. Don’t be a victim.

See www.ncdoj.gov for more information.