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Newsom Ready to Offer $331M in Homeowner & Renter Assistance

Under a proposal announced Wednesday by California Gov. Gavin Newsom, the state will fund loan assistance programs for homeowners facing foreclosure and legal aid for renters facing eviction. 

LOS ANGELES (CN) – Under a proposal announced Wednesday by California Gov. Gavin Newsom, the state will fund loan assistance programs for homeowners facing foreclosure and legal aid for renters facing eviction.

Speaking at the Los Angeles offices of legal aid organization Public Counsel, Newsom said the Golden State will deposit $331 million into a trust for nonprofit groups providing legal representation to renters and loan management to homeowners.

“Families facing eviction and foreclosure should know their rights and have legal advocates who can fight on their behalf – especially at this moment when Californians are grappling with sky-high rents and huge housing costs,” Newsom said in a statement Wednesday.

In June, Newsom signed a state budget that provides $20 million in legal aid to renters and $1 billion to cities to combat homelessness.

Programs could include legal assistance for counseling, renter and homeowner education workshops and resources for contesting evictions and foreclosures, Newsom’s office said in a statement.

Permanent funding for the endeavor will be provided by funds from a 2012 settlement between 49 states and national lenders related to the banks’ role in the 2008 subprime mortgage collapse.

The settlement provided more than $20 billion in financial relief for consumers and $2.5 billion to states, including $410 million paid to California.

In April, a state appeals court ordered California to claw back $311 million in settlement funds – which the state had used to plug holes in the budget and pay down old bond debt that was strangling the Golden State financially – and give the money to homeowner-assistance programs.

The funding plan for Newsom’s proposal will have to be approved by the Legislature.

U.S. Rep. Katie Porter, D-Irvine, said in a statement that Newsom’s proposal is part of her ongoing work to ensure that the nation’s largest banks keep their promises to struggling California homeowners. At the time of the settlement, Porter was appointed by then-state Attorney General Kamala Harris to oversee California’s cut of the deal.

“At nearly every turn, these banks – the world’s largest financial institutions – tried to skirt their responsibilities to California families, drowning homeowners in unnecessary paperwork and inventing false reasons to avoid their legal duty to help homeowners,” Porter said. “My team fought the banks, listening to and advocating for Californians who showed us over and over that the banks’ behavior did not match their CEOs’ press statements.”

Porter and Newsom told reporters Wednesday that tougher measures are needed at the state and federal level to ensure that fair housing laws are enforced.

“Money is one thing, but having a regulatory system in place is another thing,” Newsom told reporters. “These state agencies shouldn’t be in Sacramento; they should be in communities in front of their desk to understand the magnitude of what’s happening.”

Newsom also said he would support Assembly Bill 1482, by Assemblyman David Chiu, D-San Francisco, which would cap rent increases at 7% plus inflation, but added that he would push for an even stronger bill.

The governor has set a goal for the Golden State to build 3.5 million homes in the next five years, but he pushed that bar down on Wednesday, telling reporters that the goal was set “to advance a frame of urgency around this issue.” He said he would release updated, region-specific housing construction goals in the coming months.

Newsom has threatened more than 40 California cities with legal action if they don’t comply with state affordable housing construction requirements.

The former San Francisco mayor has also pushed cities and counties to build affordable housing on excess state land recently inventoried by the state.

Categories / Financial, Government, Regional

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