Troubled Ga. homeowners will not see settlement money - New York News | NYC Breaking News

A handful of the nation's banks will have to pay for the foreclosure fraud that has rocked the United States economy. In February, the federal government announced the National Mortgage Settlement, requiring $25 billion to be divided among the states.  

Part of the settlement will help individual Georgians stay in their homes through refinancing. But the cash payout, nearly $100 million paid directly to the state, won't go to homeowners. Not a penny of this cash settlement will go toward housing needs.

Georgia ranks at the top of states hurt by foreclosure, and most of those troubled homes have been in the metro area. But the governor and the state legislature decided $100 million is going somewhere else.

Andy Huff lives in the up and coming White Oak Hills neighborhood. It's located across the street from a 10-acre DeKalb County condominium complex that is falling apart.

"This is a prime example of how banks failed us in the foreclosure crisis," said Huff.

Blue Sky was once an ambitious project to turn Memorial Avenue apartments into condos. But the Blue Sky owner's conviction for mortgage fraud threw it off course, then the economy stumbled and the 144 units were nearly deserted.

"Frankly, the only people that were living here, were here living illegally," said Huff.

The foreclosure impacted the neighbors, but squatters called it home. They tapped into the power line for electricity. Gangs moved in, and crime spiked.

The White Oak Hills neighborhood panicked when police raided the complex to clear out the homeless. They found an unregistered sex offender had set up shop. Blue Sky security says they found ropes attached to a chair that could have been a potential torture device.

"We need something positive to happen on properties like this, not continued blight, continued abandonment, continued crime," said Huff.

The $25 billion National Mortgage Settlement with banks seemed like a way to solve foreclosure problems like Blue Sky. One piece of the settlement is supposed to go to individual homeowners with loan problems, but none of that $100 million in cash will.

"Now, they're being made to pay up and here in Georgia we are not using that money to do what it was intended to do," Huff said.

In a press release, the Georgia attorney general said the intent of the settlement is to prevent foreclosures.  Examples include assistance hotlines, mediation programs, legal assistance, and anti-blight programs.

That's not how this windfall of cash will be used.  Legally, the state can use this money anyway it wants. Gov. Nathan Deal is using it to fund two economic development projects with much of it benefiting rural Georgia. In a statement, the Governor said "the best way to prevent home foreclosures is to create more jobs," and new investment.

Kate Little, president of Ga. State Trade Association of Non-Profit Developers, says it's a travesty of justice. She says activists appealed to the governor to change his mind, but their calls and e-mails were unanswered.

"None of it is specifically earmarked for the counties which are suffering the most," said Little.

So the dilapidated Blue Sky complex, the size of nine footballs fields, will sit while the county foots the bill for its security. There is other money on the way, but that will be doled out by the banks for loan or interest rate reduction. But you will have to apply for it.