A battle over how to use national foreclosure settlement money in Wisconsin
Post by Emily Mills on 2/15/2012 5:00pm
Last week Gov. Scott Walker and Attorney General J.B. Van Hollen announced that a chunk of the state's $140 million share of a national settlement over bank abuses of foreclosure and mortgage-servicing would go toward plugging the projected $143 million budget shortfall.
On Tuesday, however, Reps. Tamara Grigsby (D-Milwaukee) and Cory Mason (D-Racine) introduced the Foreclosure Aid Integrity and Relief (FAIR) Act, hoping to earmark more of those funds for programs that help struggling homeowners and tenants.
Specifically, the act appropriates $25.6 million of the foreclosure settlement for direct assistance to programs which will aid families, homeowners, and foreclosure victims. The FAIR Act also provides assistance to tenants and veterans who are either facing foreclosure or confronting homelessness.
"The middle class families in Wisconsin who are dealing with the foreclosure crisis have already been ripped off once by Wall Street," said Mason. "I will not stand by and let them be ripped off again by Scott Walker."
Walker and Van Hollen have faced sharp criticism since making the announcement, especially from Milwaukee area representatives who say more money should be funneled toward that city, which has seen more than 20,000 foreclosure actions started on property owners since 2008.
The state government will receive a direct payment of $31.6 million out of its total share, $25.6 million of which has been earmarked to help plug the budget hole. Van Hollen says his office has legal authority over the money and can make decisions about where and how to use it.
All of this comes on the heels of Walker giving a keynote address at the annual Conservative Political Action Conference in which he again claimed to have balanced Wisconsin's budget.
"Some other states used budget gimmicks and tricks to balance their budget. We didn’t have to do that,” said Walker. “Instead we put in place long-term structural reforms that not only helped us balance our state budget, but our local governments, for years to come."
Using the cash accounting practices relied upon by every prior administration Walker was able to eliminate the state's structural deficit, but still left the aforementioned budget shortfall of $143 million by the end of the two year budget in July 2013. That's enough to require the Legislature take action, though Walker has stated he will not use an emergency budget repair bill to address the problem.
Using generally accepted accounting principals, which Walker promised to do in his campaign but then did not follow through on, Wisconsin faces a much larger budget shortfall in the coming years: $2.99 billion for 2011-12, and $3.02 billion for 2012-13.
U.S. Rep. Tammy Baldwin, who is currently running to replace Sen. Herb Kohl as he retires, sent a letter to U.S. Attorney General Eric Holder on Tuesday asking that any future foreclosure and mortgage settlements include language that would prohibit states from doing what Walker is planning.
Van Hollen has defended the decision, however, stating that the "overwhelming majority" of the $140 million will still go to help Milwaukee homeowners who've been foreclosed on and shouldn't have been, as well as "preventing or remediating blight and creating jobs."
Emily Mills is Editor-At-Large for Dane101, as well as Editor of Our Lives Magazine. She is also a freelance writer, photographer, actor, and musician (drummer and singer in local band Little Red Wolf). Originally from several states up and down the Midwest Emily has called Madison home since 2000. Contact her at