Wisconsin to use part of settlement for budget

Attorney General J.B. Van Hollen's office made the decision in consultation with Gov. Scott Walker, and they announced their plan Thursday.

The rest of Wisconsin's share of the $25 billion national settlement will go toward helping homeowners who were affected by foreclosure abuses between 2008 and 2011.

Walker told a news conference that just like communities and individuals affected by the foreclosure crisis, the state has also been harmed and the payment will go toward offsetting that. Walker has previously been critical of using so-called "one-time" money from legal settlements to balance the state budget.

He defended his own use of this settlement money Thursday by saying that this time it was different since the foreclosure crisis had a "direct impact on the economy."

But Milwaukee Mayor Tom Barrett said in a story published Friday by the Milwaukee Journal Sentinel ( ) that "not one dime should be used to fund the unbalanced state budget."

Barrett continued the criticism Friday, telling The Associated Press that he invites Walker and Van Hollen to tour neighborhoods in Milwaukee that have been devastated by the foreclosure crisis. Barrett said there are 4,800 abandoned homes in the city that would cost $48 million to demolish.

Barrett said all the $31.6 million coming to the state instead of directly to homeowners should be used for foreclosure mitigation programs in Milwaukee, a city that has had more foreclosures than any other in Wisconsin.

Democratic state lawmakers circulated a bill Friday that would require legislative approval before any of the money could be used to balance the budget. Republicans have majority control of the Legislature, so the proposal is unlikely to go anywhere.

A new projection released Thursday shows the state faces a $143 million budget shortfall by July 2013. Walker said his administration would plug the hole without the need to pass an emergency budget bill.

Barrett, a Democrat, is considering running against Walker, a Republican, in a possible recall election. Barrett lost to Walker in the 2010 governor's race.

Barrett said Friday his criticism of Walker on this issue doesn't have anything to do with his potential candidacy.

"This is a 100 percent about being mayor of the city of Milwaukee," Barrett said. "It would be mayoral malpractice if I didn't talk about this."

Van Hollen, a Republican, said Barrett was wrong to focus on just that one piece of the $140 million payment.

"The overwhelming majority of that $140 million is going to go to Milwaukee, is going to be able to help homeowners who are in trouble in Milwaukee, reimbursing homeowners who were foreclosed upon and shouldn't have been, preventing or remediating blight and creating jobs," Van Hollen said.

Wisconsin's share of the proposed settlement includes:

- Up to $60 million in benefits from loan term modifications and other direct relief for homeowners.

- About $17.2 million in uniform payments of up to $2,000 for eligible Wisconsin borrowers who lost their home to foreclosure from Jan. 1, 2008, through Dec. 31, 2011, and who sustained servicing abuses.

- About $31.3 million in refinancing benefits for eligible borrowers who are making payments but owe more than their home is worth.

The money is coming from Bank of America, J.P. Morgan Chase, Citigroup, Residential Capital and Wells Fargo & Co.

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Information from: Milwaukee Journal Sentinel, http://www.jsonline.com