Attorney general: Funds recovered from mortgage loan default lawusit
LEXINGTON, Ky. (Sept. 25, 2013) — More than $750,000 will be provided to Lexington initiatives that help displaced families, prevent foreclosures and create affordable housing, Attorney General Jack Conway and Lexington Mayor Jim Gray announced Tuesday.
The Office of the Attorney General provided funds it recovered after settling a lawsuit with Lender Processing Services Inc. (LPS) and two of its subsidiaries over allocations of “robo-signed” mortgage loan default servicing documents.
“During the height of the nation’s foreclosure crisis, 65,000 Kentuckians lost their homes to foreclosure,” Conway said. “Our state’s largest cities were hardest hit with abandoned properties, displaced residents, and declining neighborhoods. It’s incredibly fulfilling to know that these settlement funds will be used to create and rehabilitate affordable housing in Lexington, while helping residents who’ve lost their homes or face foreclosure.”
Upon council approval, General Conway and Mayor Gray will enter into a memorandum of agreement regarding how the settlement dollars will be spent in Lexington. The projects are as follows:
♦ $230,000 will be used by Lexington Fayette Urban County Government (LFUCG) as the local match for the federal funds to construct up to eight housing units for residential homeowners displaced by the Newtown Pike Extension Project and/or low-income, first-time homeowners.
♦ $100,000 to LFUCG that will be provided to the Fayette Local Development Corporation and/or the Lexington Urban League for property acquisitions to build and/or acquire housing for low-income renters.
♦ $125,000 to LFUCG that will used in conjunction with any Community Development Block Grant funds for the repairs and renovations of The Hope Center, a homeless shelter that provides services to more than 2,000 men each year.
♦ $50,000 to LFUCG to support emergency and transitional living services provided by the Salvation Army of Lexington, which has experienced a 25 percent increase in homeless women and children seeking emergency shelter.
♦ $125,000 to LFUCG that will be provided to Lexington Habitat for Humanity to construct at least two houses for qualified low-income families.
♦ $129,125 to LFUCG for its Housing Rehabilitation Program and its Community-Wide Emergency Repair Program to help assist property owners in making repairs to keep their homes warm, dry and safe.
“Jack Conway fought against bad lending practices and today Lexington citizens who need affordable housing are the winners,” Gray said. “These funds will make life better for dozens of local families and will help our city as we work to address homelessness concerns.”
Historic mortgage settlement history
Forty-nine state attorneys general reached the historic $25 billion settlement with five of the nation’s largest banks in February 2012. Kentucky received $58 million under the settlement; $38 million was allocated by the settlement administrator to consumers who qualified for refinancing, loan write downs, debt restructuring and/or cash payments of up to $2,000. Kentucky also received $19.2 million in settlement money that was allocated to agencies in the commonwealth that create affordable housing, provide relief or legal assistance to homeowners facing foreclosure, redevelop foreclosed properties and reduce blight created by vacant properties.
In addition to participating in the LPS settlement and national mortgage settlement, Conway filed suit in January 2013 against the Mortgage Electronic Registration Systems, Inc. (MERS) for violating Kentucky’s recording statutes by not recording mortgage assignments with county clerks when mortgages were sold or transferred from one bank to another. Additionally, the lawsuit alleges that since MERS’ creation in 1995, members have avoided paying more than $2 billion in recording fees nationwide. For additional information about the MERS lawsuit, visit migration.kentucky.gov/Newsroom/ag/merscomplaint.htm.
To learn more about the mortgage foreclosure settlement, visit ag.ky.gov/mortgagesettlement.