The head of the Delaware Community Reinvestment Action Council wants the Dept. of Justice to investigate the use of Bank of America settlement funds to balance the budget.
On June 30, Delaware state lawmakers voted in favor of using money from a pair of court settlements to plug holes in the state’s $3.9 billion budget for Fiscal Year 2016.
The state utilized a little more than half of the $61 million won through two settlements, one with rating agency Standard and Poor’s and one with Bank of America and Citigroup.
That was inappropriate according to Rashmi Rangan. She’s the executive director of the Delaware Community Reinvestment Action Council, an advocate for fair treatment of Delaware borrowers, especially in low income and minority communities
“When the state goes rogue who holds them accountable?” Rangan said. The settlement language was clear and unambiguous. The money was provided “to address the mortgage and foreclosure crisis, financial fraud and housing related issues.” Rangan said those who crafted the settlement never foresaw the need to put a monitor in place to oversee the distribution of the funds.
In her letter sent this week to U.S. Attorney General Loretta Lynch, Rangan wrote, “There exists a real danger that this sizeable chunk of remedial relief will not be used by the State of Delaware for the purpose of providing restitution or remediating harms to Delaware and its victim communities.”
DCRAC pro bono volunteer attorney James Angus said this use of the funds “should make future litigants leery of monetary negotiations with the state when they have no assurances that compensation and damages will not be redirected by the state for other purposes.”
Rangan said that in Delaware, 1 in 300 Delaware homes were in foreclosure in the first quarter of 2015. There were 669 foreclosure actions filed from January to March. Delaware is among the top ten states for foreclosure filings nationwide.