Arizona Homeowners File Suit Against State for Foreclosure Fraud Settlement Fund Raid

The response to the foreclosure fraud settlement fund raid in multiple states, now up close to a billion dollars, has been shockingly muted. No progressive group or housing-focused organization has done much more than grumble about the fact that money intended to go to homeowners is being diverted into state budgets all over the country.

But one state is trying to fight back. In Arizona, a group of homeowners have filed a lawsuit against state Attorney General Thomas Horne and State Treasurer Doug Ducey, arguing that the $50 million the state will skim off the settlement payout for the General Fund (out of a total of $97.7 million) violates the settlement agreement. Here’s the meat of the complaint:

4. On May 1, 2012, the Arizona Legislature passed a general appropriations bill, SB 1523. Governor Brewer signed SB 1523 on May 7, 2012. In SB 1523, the legislature directed the Attorney General to place $50 million of the Settlement Funds, more than half of the funds that are to be deposited into Court Ordered Trust Fund, into the state’s general fund.

5. If this transfer occurs, the Settlement Funds in the Court Ordered Trust Fund will not be used for the designated purposes and distressed Arizona homeowners will not receive the assistance they need to be able to stay in their homes and avoid foreclosure.

6. Plaintiffs seek declaratory and injunctive relief to enjoin Defendants from taking any action to transfer the Settlement Funds from the Court Ordered Trust Fund into the state’s general fund and from using the Court Ordered Trust Fund for purposes not designated int he Consent Judgments.

Rest here…

Copy of the complaint below…