Louisville gets $3 million, Ky. Housing Corp. gets $7.5 million in mortgage settlement funds
LOUISVILLE, Ky. — Louisville will receive $3 million and the Kentucky Housing Corp. is getting $7.5 million from a $25 billion national settlement with five banks over mortgage foreclosures.
The funds come from a $19.2 million allocation Kentucky received as part of the agreement between 49 states and the five banks. The settlement will provide relief to thousands of homeowners who were foreclosed upon after the housing bubble burst, principal write-downs and refinancing to homeowners whose mortgages exceed the value of their homes and payments to states for consumer protection programs.
Kentucky also received $38.7 million that will be allocated by the administrator of the settlement to consumers who qualify for refinancing, loan write downs, debt restructuring or payments of up to $2,000.
Along with $1.5 million in cash, the city's Vacant Abandoned Property Initiative will receive $750,000, another $500,000 will go to the city's Targeted Demolition Program aimed at removing deteriorated properties and $250,000 to the Affordable Housing Trust Fund for grants to groups that create or preserve affordable housing.
Attorney General Jack Conway said the scale of the problem in Louisville determined the city's amount of the settlement. Between 2008, when the foreclosure crisis started nationally, and 2011, 16,403 property foreclosures were reported in Jefferson County. Across Kentucky, there are more than 67,000 foreclosed properties, Conway said.
"Louisville has about 30 percent of the foreclosure problem, so it makes sense that the city gets 30 percent of the money," Conway said Monday.
The national mortgage settlement between 49 states and Citigroup, Bank of America, JP Morgan Chase, Wells Fargo and Ally Financial, provides the funds, but also preserves the rights of states to pursue criminal and civil actions and allows homeowners to pursue their own lawsuits, even if they receive a help from the settlement.
Oklahoma is the only state that did not participate. It is the largest action taken by states attorneys general against an industry since the 1998 tobacco settlement.
Louisville Mayor Greg Fischer said the money will allow the city to foreclose on 700 vacant homes, demolish 75 others and create a revolving loan fund within the Affordable Housing Trust Fund to rehabilitate vacant properties.
Some homes have the words "no copper" painted on the boards covering empty windows — a message aimed at keeping thieves and looters away, Fischer said.
"Living next to a house like that ... is not the way we want to be living," Fischer said, standing in front of an abandoned property with two boarded up windows, no functioning electrical system and overgrown grass in west Louisville.
Louisville Councilwoman Cheri Bryant Hamilton, who represents a section of western Louisville, described the area as "ground zero in the crisis."
"Our neighborhoods have been devastated by the foreclosure crisis," Bryant Hamilton said.
Rich McQuady, CEO of the Kentucky Housing Corp., said the funds will go toward helping stabilize neighborhoods cross the state, from Pikeville to Paducah. About $3 million of the funds given to the Kentucky Housing Corp. will go to the Neighborhood Work Alliance with the hope of using it to draw matching grants in the amount of $7.5 million from Bloomberg Philanthropy, a charity run by New York Mayor Michael Bloomberg.
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Online: The National Mortgage Settlement: http://www.NationalMortgageSettlement.com
The Kentucky Attorney General's site for information about the settlement:http://www.ag.ky.gov/mortgagesettlement
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