DENVER (AP) – Homeowners facing foreclosure and veterans in need of temporary housing will be among the recipients of Colorado’s portion of a $25 billion settlement with mortgage lenders.
Gov. John Hickenlooper and state Attorney General John Suthers announced details Friday on how Colorado will spend its $51 million in discretionary money from the settlement reached last month. Most of the rest of the money goes directly to homeowners affected by the mortgage crisis.
“This settlement benefits the housing markets in our local communities,” said Suthers, who predicted Colorado could have the money in hand by June.
The biggest portion of the money, $24 million, will be divided between two loan-modification programs for borrowers in trouble. The first will design pool insurance to help borrowers refinance. The second will provide cash to defaulted borrowers to help them refinance. The loan-modification programs would last three years, Suthers said.
“This new program will come into play, really will be used as a last resort for those borrowers who have the ability to save their homes,” Hickenlooper said.
Not all of the spending will be directed at foreclosures, but state officials took pains to argue the other uses are related to the housing crisis.
Hickenlooper said that $13 million for loans to stimulate apartment construction, for example, is a need caused in part by the mortgage problems.
“The foreclosure crisis really has led to a decrease in rental vacancies, increase in rental costs. We see very clearly in homeless numbers, there is a vital need for more affordable housing,” Hickenlooper said.
Officials also made a foreclosure connection to the decision to spend $5 million in settlement money repurposing a shuttered prison that state officials have struggled to find a use for. The former Fort Lyon Correctional Facility in Bent County could eventually house up to 400 veterans.
“We know we that have a need for greater housing and treatment options for returning veterans … to really allow them to rebuild their lives,” Hickenlooper said.
After the announcement, Hickenlooper’s chief of staff, Roxane White, said the state is still exploring different uses for Fort Lyon and may announce something else will go there. She conceded that veterans’ housing may not require as many workers as the 200 or so who staffed the prison, but she pointed out that unlike inmates, veterans at the facility could be free to leave for shopping or dining.
“We will go with the best economic engine we can for Fort Lyon,” White said.
Suthers said Colorado could expect more money in the future from mortgage settlements, though likely nothing as much as what was announced last month. Suthers said states are pursuing settlement money from smaller mortgage lenders and settlements on other aspects of the business than loan servicing.
– By Kristen Wyatt, AP Writer
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