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Complaint Final (B&W Petition) (1)

Complaint Final (B&W Petition) (1)

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Published by jeremybwhite
Lawsuit against Gov. Jerry Brown, Controller John Chiang over mortgage settlement money
Lawsuit against Gov. Jerry Brown, Controller John Chiang over mortgage settlement money

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Published by: jeremybwhite on Mar 14, 2014
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03/16/2014

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2 Petition for Writ of Mandate and Complaint for Declaratory and Injunctive Relief
12345678910111213141516171819202122232425262728* * * This Petition asks the Court to compel the Governor and other California officials to obey the law. In 2012, following a settlement with five of the nation’s largest mortgage servicers that was secured in large part due to the important role played by the California Attorney General, a Special Deposit Fund was created as a repository of $369 million in settlement proceeds specifically intended to give California homeowners the necessary counseling and assistance to save their homes from foreclosure, among other similar purposes. The Governor promptly—and, indeed, unlawfully—diverted most of the $369 million away from the Special Deposit Fund and into the General Fund, with no apparent intention of reconstituting the special fund unless the Court compels him to do so. There is no question that the $369 million at issue was required to be deposited into a Special Deposit Fund. There is no question that this sum was supposed to be devoted to the specific  purposes for which the Special Deposit Fund was created, as expressly recited in the pertinent settlement documents co-signed by the California Attorney General’s Office. There is no question that most of the money was instead diverted to the State’s General Fund to pay off the State’s general debts. And there is no question that the Governor has projected a large budgetary surplus for 2014 and beyond, but has given no indication in his budget that he intends to replenish the diverted funds, now or ever. This Court should therefore compel the Governor and the other named Respondents to follow the law and to allow California homeowners to reap the benefits of the settlement secured for them  by their Attorney General. The Governor had no legal right to divert these funds in the first place and, even if he did, he certainly has the statutory duty to replenish them in this year of surplus. Petitioners and their constituents, along with all other affected California residents, desperately require the Special Deposit Fund to be replenished to give them a fighting chance to save their homes from foreclosure and to equip them with the necessary counseling to help avoid future struggles. For this reason, Petitioners ask the Court to issue a writ of mandate compelling the Governor, along with his Director of Finance, the official who formulated the spending plan for the
 
 
3 Petition for Writ of Mandate and Complaint for Declaratory and Injunctive Relief
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funds in question, and the Controller, the officer who carried out that directive, to reconstitute the Special Deposit Fund with the unlawfully diverted settlement proceeds. Petitioners are three California-based Section 501(c)(3) organizations whose constituents would benefit from replenishment of the Special Deposit Fund to help them weather the economic storm that continues to sweep so many families out of their homes. Petitioner National Asian American Coalition is a HUD-approved counseling organization that so far has helped more than 6,000 homeowners to avoid foreclosure and eviction. Petitioner COR Community Development Corporation, affiliated with Christ Our Redeemer African Methodist Episcopal Church, is committed to empowering impoverished communities by providing services in the areas of education, financial literacy, affordable housing, and civic engagement. Petitioner National Hispanic Christian Leadership Conference is the largest Latino Christian organization in America, with 6 million members and 40,000 affiliated churches, including approximately 1,500 churches in California. The latter two Petitioners have the infrastructure in place and the intent to provide counseling programs and training to affected homeowners, but only if the required funding becomes available, such as through replenishment of the Special Deposit Fund. Petitioners bring this Petition on behalf of themselves and their California constituents, seeking a writ of mandate, along with declaratory and injunctive relief, against Governor Edmund Gerald “Jerry” Brown, Director of Finance Michael Cohen, and Controller John Chiang, and allege as follows:
INTRODUCTION
1.
 
Two years ago, the federal government and 49 states reached an historic $25 billion settlement with five of the country’s largest mortgage servicers. That settlement, known as the  National Mortgage Settlement, promised retrospective compensation for millions of U.S. homeowners who had allegedly been victimized by the defendant mortgage servicers in the aftermath of the financial crisis. To limit future abuses, the settlement also promised prospective support for housing counselors, consumer fraud education, and other programs designed to assist Californians in their dealings with mortgage service providers, including in negotiating the often convoluted mortgage modification process.

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