Richard Roman: Use mortgage settlement money for victims

By / Guest columnist | January 26, 2014

Attorney fees in indigent defense cases prompted the question: "What's the price of justice?"

Unilaterally increasing the fees is not the answer. The Texas Constitution does not empower judges to burden taxpayers with increases in indigent defense expenditures.

Taking money from innocent homeowners victimized by the subprime mortgage crisis to pay for indigent defense is not justice.

El Paso families have been impacted by unexpected medical bills, layoffs and the government shutdown. Many fell behind on their mortgages. Dealing with less-than-compassionate banks was no help. Some banks were guilty of questionable practices.

Recently, Texas Attorney General Greg Abbott's office settled mortgage lawsuits filed in E1Paso courts. Millions of dollars of relief were obtained for homeowners. Yet in December 2013, Abbott explained how settlement funds were used to fund Texas Indigent Defense Programs. Documents obtained through open records requests verified that foreclosure settlement funds were deposited into the Texas Judiciary Fund.

The U.S. Department of Justice and a group of state attorneys general recently settled with mortgage servicers to assist struggling homeowners.

Last November a $13 billion settlement that JP Morgan Chase reached with government regulators was touted as the "largest settlement with a single entity in American history."

The Los Angeles Times said that of the $13 billion, $7 billion was tax deductible and $4 billion was from a "separate" settlement (the Federal Housing Finance Agency). The remaining $2 billion was for promoting "lending in low-income communities." Eligible borrowers should begin receiving calls in March.

As for Texas, state Sen. Jose Rodriguez recently stated, "In the best of all possible worlds, the state ought to raise taxes to adequately fund civil legal services and indigent defense, but we all know that the state is not willing to do that at this time."

This funding debate is not limited to Texas.

New York Gov. Cuomo is in a dispute with the Working Families Party and New York Attorney General Eric Schneiderman over who gets $600 million from a foreclosure settlement Schneiderman negotiated with JP Morgan Chase. He argues his office has sole discretion over the money and it should go to homeowners. Cuomo said he and the Legislature should decide.

"This money should go where it's needed most - to underwater homeowners victimized by Wall Street's subprime crisis," said Working Families Party National Director Dan Cantor.

Critics argued that putting it in the state's general fund short-changes those who lost their homes in the mortgage crisis because the funds could be used for any purpose. They said that "similar settlements in the past, including those entered into by Cuomo when he was attorney general, stayed within the AG's office. None were this size, however".

An El Paso task force was created to look at indigent defense issues. Perhaps a task force should be formed to study "innocent" homeowner relief.

There was an unjustified $2 million increase in private reimbursements for indigent defense this year. An additional $500,000 is being sought for the remainder of the fiscal year. County Judge Veronica Escobar said the county will "pull the money from our contingencies if we are forced to do it."

The Council of Judges has been asked to reconsider their vote to raise attorney fees. Attorneys should be fairly compensated for their indigent defense work. However, money secured from mortgage litigation should go where it's needed most - to innocent homeowners victimized by the subprime mortgage crisis, not towards funding indigent defense.

Gov. Cuomo and Attorney General Schneiderman appear to have settled their dispute over how New York will use mortgage settlement funds.

Perhaps Texas and El Paso County can do the same.

Richard Roman is an El Paso attorney and former district judge.

This article first appeared in the El Paso Times, but shortly after MSFraud posted it, the links went down, so we posted it here.