– California Governor Sued Over Foreclosure Fund Diversion (Bloomberg, March 14, 2014):
California Governor Jerry Brown was sued by nonprofit groups claiming he raided most of a $369 million special fund for distressed homeowners to pay the state’s general expenses.
Brown diverted the money over objections by California Attorney General Kamala Harris, a fellow Democrat, after she had secured the fund for homeowners from a $25 billion national settlement with major banks in 2012 over mortgage-servicing practices, according to a complaint filed today in state court in Sacramento.
A similar tug-of-war between elected officials broke out last year in New York — pitting Governor Andrew Cuomo against Attorney General Eric Schneiderman — after the state was allocated $613 million in a nationwide mortgage-fraud settlement with JPMorgan Chase & Co.
“Harris did an outstanding job,” Robert Gnaizda, general counsel of the National Asian American Coalition, one of the plaintiffs in today’s complaint, said at a news conference. “She made clear the governor had no legal right to take the money, and she protested publicly.”
Gnaizda’s organization and groups including COR Community Development Corp. and National Hispanic Christian Leadership Conference are seeking a court order compelling Brown to return the allegedly diverted funds to the homeowners’ relief fund.
“While we haven’t yet seen the complaint, we’re confident that our budget actions are legally sound,” H.D. Palmer, a spokesman for California’s finance department, said in an e-mail.
Nick Pacilio, a spokesman for Harris, declined to comment.
The case is National Asian American Coalition v. Brown, California Superior Court (Sacramento).