State Misspent $330 Million, Court Rules

The California Supreme Court this month declined to hear a state appeal of a lower court ruling that California misspent $330 million meant to assist homeowners in foreclosure as part of a 2012 settlement from banks stemming from the 2008 mortgage crisis.

As part of the settlement, California received $18 billion total and set aside $331 million for programs to help homeowners with legal assistance and consumer education. Instead, Governor Jerry Brown and the Legislature used most the money to pay off state housing bond debts.

Community groups sued the state, alleging the money was used inappropriately for general purposes. The lower courts agreed.

The Newsom administration appealed to the Supreme Court, arguing that the spending was appropriate since the Legislature spent most of its share of the settlement proceeds to offset existing costs for assisting homeowners and protecting consumers. The Supreme Court declined to hear the appeal, leaving in place the lower court’s ruling. (Source: The Sacramento Bee, July 18.)

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