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Gov. Brown gets backing to use settlement funds for budget gap

California's legislative analyst's office says some of the money from a settlement with mortgage lenders can go toward a variety of purposes.

May 23, 2012|By Marc Lifsher, Los Angeles Times

SACRAMENTO — Some of California's share of the money from a national legal settlement with big mortgage lenders can be used to help fill a hole in the governor's proposed budget, the Legislature's nonpartisan policy advisor recommended.

The legislative analyst's office reported Tuesday that $411 million should be used for a variety of purposes.

Atty. Gen. Kamala D. Harris, who reached the settlement together with other state attorneys general, wanted to use most of the $411 million on financial counseling and education.

But Gov. Jerry Brown said he wanted to use that money to pay interest on housing bonds and to fund existing housing anti-discrimination programs.

In a report, the analyst said using the settlement money "makes sense given the state's fiscal situation."

The bulk of California's share of the settlement, $17.6 billion, is not being sought by Brown. The funds will provide direct benefits to homeowners trying to lower payments on their mortgages and will cover damages for borrowers who were unfairly or illegally foreclosed upon during the recession of 2007-2009 and its aftermath.

The attorney general understands Brown's budget problems but objects to giving up any of the settlement, Harris spokeswoman Lynda Gledhill said.

"California homeowners need more help, not less," Gledhill said.

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