CARSON CITY, Nev. (Legal Newsline) - Nevada Attorney General Catherine Cortez Masto's plan to use $11.7 million in funds from a nationwide mortgage settlement was passed by state lawmakers last week.
The $11.7 million is just year one of a three-year, estimated $33.5 million program designed by the attorney general.
In February, a group of 49 state attorneys general, including Masto, and federal officials reached a $25 billion agreement with five banks -- Wells Fargo and Co., JPMorgan Chase and Co., Citigroup Inc., Ally Financial Inc. and Bank of America Corp.
The probe, which began in October 2010 with inquiries into so-called "robosigning" practices, broadened into identifying and addressing additional alleged improper foreclosure practices.
As part of the multistate deal, Nevada received $57 million in assistance for struggling homeowners.
In addition to the multistate settlement -- which only covers those mortgages held by the five banks, not Fannie Mae or Freddie Mac -- the state received another $30 million in a separate settlement with Bank of America.
The first phase of Masto's proposed program, the National Mortgage Settlement Plan, was passed unanimously by the state Legislature's Interim Finance Committee Thursday.
"Nevada has been devastated by the mortgage fraud and the foreclosure crisis," the attorney general said in a statement Friday.
"The Nevada Attorney General's National Mortgage Settlement Plan will offer much needed help for families in the Silver State by investing in broad scale statewide initiatives, essentially a one-stop-shop, which will assist distressed borrowers free of charge."
The program will help residents by creating a dedicated call center that will route people to trained housing counselors that can inform them of the settlement benefits and other state and federal foreclosure assistance programs options available to them.
"This call center will serve as a hotline to help and hope," Masto said.
The attorney general said her office also is working with U.S. Department of Housing and Urban Development housing counseling agencies, led by Financial Guidance Center (formerly known as Consumer Credit Counseling Service of Nevada), Nevada Legal Services, Legal Aid Center of Southern Nevada, Nevada Affordable Housing Assistance Corporation, other community stakeholders and elected officials to develop additional plans to implement the settlement funds and how best to educate the community about the program.
Masto's program will help alleviate the effects of the mortgage and foreclosure crisis in the state by:
- Enhancing housing counseling agencies services and efforts to provide financial literacy programs;
- Enhancing legal aid ability to assist homeowner foreclosure mediation efforts and deliver legal representation when needed; and
- Supporting law enforcement efforts to investigate, prosecute, litigate and prevent financial fraud or unfair or deceptive practices.
According to Masto's office, the program will initially create or save a total of 73 jobs.
Additional staffing for housing counselors will allow them to provide assistance to reach about 30,000 residents in one year, the office noted.
Last week's approval funded the full $11.7 million amount requested for year one.
In the next legislative session, Masto said she will request that lawmakers review the program and based on need, continue funding.
Some lawmakers, especially Republicans, are already scoffing at the attorney general's program.
According to the Lahontan Valley News, Assemblyman Pat Hickey, R-Reno, questioned whether the three-year program was the best use of the $33.5 million during a lengthy discussion before the IFC's vote.
State Sen. Ben Kieckhefer, R-Reno, was concerned whether the IFC -- which consists of members of the Senate Finance and Assembly Ways and Means committees -- even had the authority to make such a 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, according to the newspaper.
"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."
From Legal Newsline: Reach Jessica Karmasek by email at email@example.com.