A chunk of the Justice Department's recent $16.65 billion settlement with Bank of America may go to a government-chartered nonprofit that gives hundreds of millions of dollars to housing activists once associated with the infamous ACORN group.
Attorney General Eric Holder lauded the pact as "the largest such settlement on record," adding that "the bank has agreed to pay $7 billion in relief to struggling homeowners, borrowers and communities affected by the bank’s conduct. This is appropriate given the size and scope of the wrongdoing at issue.”
The 37-page settlement stemmed from investigations by the federal government and six states into alleged Bank of America violations of federal mortgage and investment laws and regulations in the years leading up to the 2007 collapse of the U.S. housing bubble.
The $7 billion "consumer protection" fund will cover consumer costs of debt forgiveness, new mortgages at more favorable terms for injured parties, and rent subsidies for temporary housing.
The provision stipulates that money from the $7 billion fund that is not used after four years be distributed to Interest on Lawyers' Trust Accounts and NeighborWorks of America.
IOLTA is associated with the American Bar Association and provides legal help for the poor.
NeighborWorks of America was established by Congress in 1978 as the Neighborhood Reinvestment Corp. The nonprofit, which changed its name in 2005, received $204 million in public funds in 2013.
The group has made nearly 4,000 affordable housing grants totaling $1.2 billion since 1999, with much of the money going to projects associated with ACORN, the Association of Community Organizations for Reform Now.
Congress banned federal funding for ACORN in 2009 after years of allegations of misuse and corruption, but many of its local chapters reorganized under new names and continued their previous operations.
Annex 2, one of the settlement's supporting documents the Justice Department posted on its website when the deal was announced Aug. 21, was no longer there Friday.
Annex 2 described the cy pres stipulation and named the two receiving groups. Cy pres provisions are common in class-action litigation but usually allow the presiding judge to choose recipients of unclaimed funds.
There is no guarantee that any of the $7 billion will remain unspent in four years, but it is not unusual for large amounts to go unclaimed by victims in a class-action lawsuit settlement.
A Justice Department spokesman did not respond to a request to explain why the document was removed from the agency's website.
Investor's Business Daily published an editorial Thursday that was highly critical of the settlement and noted that it also included a stipulation encouraging Bank of America to give an additional $100 million to IOLTA and other government-approved groups.
One of those groups is the Mutual Housing Association of New York, whose executive director was formerly ACORN's New York housing director.Mark Tapscott is executive editor of the Washington Examiner.