INDIANAPOLIS — After Indiana received a cut of the 1998 multi-billion dollar settlement from the tobacco industry intended to pay for public health initiatives, the Legislature tapped into the money for a host of non-health-related expenditures.
Legislators likely won't be able to do that with Indiana's cut of the recent multi-billion dollar settlement with mortgage lenders accused of fraud.
A $28.8 million slice of that settlement fund will go to help low-income Hoosier homeowners pay off their utility bills. It can’t be used for anything else under legislation signed into law last week by Gov. Mitch Daniels.
Supporters of the measure say low-income homeowners who were most at risk of being foreclosed on are also the most likely to have difficulty paying utility bills.
“The mortgage lending institutions that preyed upon borrowers and engaged in illegal practices are paying millions of dollars in settlement money to Indiana,” said state Attorney General Greg Zoeller at a press conference Tuesday. “The Legislature wisely channeled this flow of dollars into a fund where at-risk homeowners can be helped.”
Zoeller was one of 49 state attorney generals who negotiated a $25 billion settlement with five major mortgage lending banks accused of engaging in illegal “robo-signing” of foreclosure documents. That settlement, announced in February, set aside about $100 million in direct assistance for Indiana homeowners who lost their homes through foreclosure or are at risk for doing so.
Another $45 million was directed to the state. About $15 million will go to the attorney general's office to expand efforts to prevent mortgage foreclosure. And the rest — about $28.8 million — will boost funding of the Low Income Home Energy Assistance Program, known as LIHEAP.
The legislation came about as a solution to a difficult problem.
Indiana's share of the federally funded LIHEAP shrank from about $100 million to about $82 million last year. That meant the low-income families who were eligible for the assistance received a smaller portion of funds to help pay their utility bills. The average amount of assistance dropped from about $378 per household in 2011 to $225 in 2012.
The Indiana Community Housing Authority will determine whether the new money will be used to help more families or give the families who receive assistance more help. About 160,000 low-income Hoosiers benefited from the program last year.