National Asian group wins anew in $331-M verdict for struggling California homeowners

THE California Supreme Court denied review of a lower court ruling on Thursday, July 18, ordering the return of $331 million to a fund for struggling homeowners.

Led by the National Asian American Coalition (NAAC), a housing counseling organization, the case sought to restore money to the National Mortgage Special Deposit Fund, which was created to pay for housing counseling, legal assistance, and fraud prevention services for financially distressed homeowners.

The state obtained this money as part of a 2012 national settlement with the nation’s five biggest banks for their fraudulent lending practices, which led to millions of people losing their homes due to mortgage delinquencies and foreclosures. 

At the height of the crisis, NAAC as a HUD-approved housing counseling agency was at the forefront assisting struggling homeowners to negotiate loan modifications and provide refinancing to help them keep their homes.

Instead of devoting the money to helping homeowners affected by the crisis, however, then-Governor Jerry Brown illegally diverted the funds to plug budgetary shortfalls and to pay off existing state debt. 

NAAC with co-plaintiffs then sued the governor and state finance officials in 2014 to compel the return of the $331 million to the fund. 

Both the trial court and appellate court found the transfers to be illegal and ordered the immediate return of the funds to the fund. 

Brown rushed a budget trailer bill through the state legislature before stepping down in an attempt to circumvent the courts, and then appealed anew to the Supreme Court. 

The Supreme Court remanded the case to the Court of Appeal, which found that the budget trailer bill could not work to retroactively cure the unlawful diversions. 

After years of litigation, the Supreme Court declined another review, making the lower court rulings final.

Faith Bautista, NAAC president and chief executive officer, celebrated the arduous victory.

“We fought long and hard for the homeowners and I’m so happy that they will finally get the help they need,” she said, insisting that the fight is not yet over. “We won’t rest until the

money is in the hands of those who really need it. If there’s one thing we learned throughout this difficult process, it’s that community groups must have the strongest say in allocating this money. We can’t trust that politicians will do what’s best for homeowners after they’ve tried at every turn to frustrate the will of the people and the courts.”

NAAC, along with the community and faith-based and nonprofit leaders of the National Diversity Coalition (NDC), plans to hold a rally and press conference at the state capitol to ensure that the National Mortgage Special Deposit Fund gets immediately funded, and to make certain that community groups on the ground that regularly interact with struggling homeowners and distressed families will administer or at least provide strong oversight over the use of the funds. (AJPress)

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