Lawmakers Approve $11.7 Million Plan From Attorney General To Help Homeowners In Foreclosure Crisis

CARSON CITY – Several lawmakers raised questions today about a proposal put forth by Attorney General Catherine Cortez Masto to spend $33 million over three years on outreach, counseling and legal assistance to homeowners who are facing foreclosure.

The program outlined for the Legislature’s Interim Finance Committee (IFC) by Masto is proposed to be the first phase of a plan to use $57 million Nevada received from the country’s five largest banks as part of a national settlement over the mortgage crisis. Nevada received another $30 million in a separate settlement with Bank of America.

Despite the concerns expressed during a lengthy discussion, the vote to approve the program was unanimous.

Photo posted by Gruntzooki via Wikimedia Commons.

The program is expected to provide a one-stop shop for homeowners to get free access to certified counselors and legal assistance if needed so they can access the many programs available to those who qualify.

Assemblyman Pat Hickey, R-Reno, expressed concerns that the IFC, made up of the members of the Senate Finance and Assembly Ways and Means committees, was being asked to approve a program before it could be evaluated by the full Legislature in 2013.

He also questioned whether the $33 million in expenditures for the services outlined by Masto was the best use for the money rather than getting it directly into the hands of homeowners in need.

Concerns were also expressed by a number of other Republican members of the IFC about aspects of the proposal.

Sen. Ben Kieckhefer, R-Reno, questioned if the IFC even had the legal authority to implement such a major policy decision.

“I mean, if this was a proposal that came to the Legislature, we would have days of hearings on it in multiple chambers,” he said. “This is a, I think, major policy decision about how we’re addressing one of the most significant problems facing the people of this state and it’s being made by a small subset of the legislative body and there are voters in this state who are disenfranchised from making this decision.”

But the Legislative Counsel said it was appropriate and similar actions have been taken in the past by the committee.

Senate Majority Leader Steven Horsford, D-Las Vegas, said the program outlined by Masto will help distressed Nevada homeowners access $25 billion available nationwide that will be doled out on a first-come, first-served, basis. Failing to get the program started now could mean that Nevada homeowners, among those hardest hit by the foreclosure crisis, will not get their share of those funds, he said.

The debate over the $33 million is missing the big picture, Horsford said.

The approval today was only for the first year’s worth of funding of $11.7 million. The $10.8 million in years two and three will be part of the Attorney General’s proposed budget for the 2013-15 biennium that will be reviewed by lawmakers in 2013.

The first year budget includes $9.4 million for public outreach and access to HUD-certified counselors. Another nearly $1.2 million will go to Nevada Legal Services and the Legal Aid Center of Southern Nevada to provide assistance to homeowners. Former Assembly Speaker Barbara Buckley is executive director of the Legal Aid Center of Southern Nevada.

Nearly $570,000 will be spent on expanding an existing call center operated by the Nevada Affordable Housing Assistance Corporation (NAHAC), a non-profit arm of the Nevada Housing Division. Just under $500,000 will go to the Attorney General’s office for staff and expenses to investigate mortgage fraud and administer the entire program.

Sen. Barbara Cegavske, R-Las Vegas, expressed concerns about the funding for the legal aid, questioning if the money would be used to commence new legal actions against the banks on behalf of specific distressed homeowners. Her concerns were echoed by Assemblyman Pete Goicoechea, R-Eureka.

Masto assured lawmakers the spending on legal aid will be used to assist homeowners, not initiate lawsuits.

“This is not about giving legal aid so they can go out and start suing,” she said. “This is actually about providing relief to the homeowners who are distressed. There’s a lot of legal issues they may deal with beyond just suing the banks. And that’s what legal aid provides.”

Despite the concerns lawmakers agreed the urgency of the situation required their action.

“We do need to get the ball rolling,” Goicoechea said. “It isn’t doing us any good in this state to have people living in homes, not making any type of mortgage payment on it, destroying that home, and the bank doesn’t have the ability to foreclose it, can’t get the certification in place, and it isn’t doing our state or our economy any good.”

The funds to be used for the program were paid by the banks to settle state and federal investigations into robo-signing allegations.

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Audio clips:

Sen. Ben Kieckhefer says the major policy decision should be made by the entire Legislature:

082312Kieckhefer :26 making this decision.”

Assemblyman Pete Goicoechea says that while he has concerns, the state needs to take action:

082312Goicoechea :17 economy any good.”

Attorney General Catherine Cortez Masto says the legal aid funds won’t be used to sue the banks:

082312Masto :13 legal aid provides.”