ALBANY – A thorny, $613 million dispute between Gov. Andrew M. Cuomo and Attorney General Eric Schneiderman has been settled – for now.
The two sides, warring behind the scenes over how proceeds from a settlement with JP Morgan Chase should be spent from a major legal settlement partly negotiated by the attorney general, agreed Monday on an overall breakout for how the first year of the money flow will be spent.
Cuomo and Schneiderman, who have not been the best of political allies, said all of the money, as intended, will in some form or another end up going to help fund housing-related programs. But the attorney general lost his bid to decide how all of the money from his settlement will be spent.
The U.S. Justice Department last year settled its mortgage bond sale investigation of JPMorgan for a $13 billion settlement payment by the bank, with $613 million going to New York. The deal Schneiderman signed said all the money destined for New York would go for housing-related programs, including foreclosure-prevention efforts, and that he would decide, without input from the governor or State Legislature, the specifics of the allocations.
But with his aides putting together the 2014 budget due to be unveiled Tuesday, Cuomo wanted a piece of that funding. The deal announced Monday by the two Democrats calls for $163 million in the first year to be split between the control of Schneiderman and Cuomo. Half of the money will go to the state’s general fund. While the Cuomo administration sought to characterize that money as being directed solely for housing-related programs, its destination – the government’s overall general fund – means it will also make it easier for the governor to fund everything from extra money for public schools to tax breaks.
The other half of the first-year money will be administered by Schneiderman, though he must coordinate with Cuomo-led state housing agencies and use the same procurement rules as any other state agency, the deal claims.
Schneiderman’s office put a positive spin on the agreement. “In addition to allocating funds to proven programs that have helped thousands of New Yorkers recover from the housing collapse and ground-breaking initiatives that will bring systemic reforms to mortgage markets, Attorney General Schneiderman will allocate $81.5 million of the $613 million recovered from JPMorgan Chase to state programs that provide relief to homeowners. As was the case with funds from the National Mortgage Settlement, the attorney general looks forward to using his discretion to allocate funds from this and future bank settlements in an open and transparent way to help as many New York families as possible.”
The attorney general’s office said a state Mortgage Relief Incentive Fund will be created to work with lenders owning or servicing troubled mortgages held by their borrowers. The fund, according to the attorney general, can make payments to do everything from reduce mortgage principle obligations to provide state-backed guarantees to lenders who modify terms of a mortgage under-water or risking default.
The overall agreement calls for money to be used in a variety of ways, including direct money to localities “burdened by vacant and abandoned properties’’ for land bank operations to help rehabilitate decaying neighborhoods. The money can also go to provide state loans to qualified homeowners to help them pay off their mortgages by giving them low-interest loans to fund other debt they hold.
The specifics of how Schneiderman’s allotment will be spent are still being developed by the attorney general, but officials said the money will flow “in an open and transparent way to help as many New York families as possible.’’
Richard Azzopardi, a Cuomo spokesman, said Monday’s deal will steer money to housing crisis victims in a way that provides oversight. “It further ensures that the transparent disbursement process that has been followed by past attorneys general remains in place,’’ he said.