Written by Donald A. Promnitz
Chris Montelongo and his peers are ready to end a long fight for overdue funds that, they say, were taken from the people they represent.
For the past several years, Montelongo — who serves on the board of directors for the National Hispanic Christian Leadership Conference (NHCLC) — has been working with a coalition of other nonprofits to bring back millions of dollars awarded by the federal government to relieve the effects of the mortgage crisis of the mid to late-2000s.
The money in question stems from a $25-billion settlement with the five largest U.S. banks — JPMorgan Chase, Citigroup, Wells Fargo, Bank of America and U.S. Bancorp — when it was found to be engaging in predatory loan practices that later devastated lower-income neighborhoods and communities. Fresno was one city hit particularly hard by the crisis, and many people lost their homes as result of these loans, including Montelongo’s parents. He added that areas like downtown were hit particularly hard, resulting in a high number of vacant properties, vandalism and burglary of empty homes, fires and greater pressure on public safety.
“It contributed to a downward spiral,” Montelongo said. “You talk about the crime, you talk about blight, so there was just all these different kinds of things that started to unwind when it came to people losing their homes and foreclosures.”
In 2012, with help from Sen. Kamala Harris (then California’s attorney general), California was able to secure $410 million from this settlement to help homeowners who were impacted. However, according to Montelongo and Faith Bautista, president and CEO of the National Asian American Coalition (NAAC) and CEO of the National Diversity Coalition (NDC), former Gov. Jerry Brown dipped into this fund, reallocating $331 million to other purposes.
Organizations like the NHCLC, NAAC and NDC responded to this with a lawsuit in 2014, in which went in favor of the plaintiffs the next year. The state tried to appeal the ruling for five years, ending this summer with the California Supreme Court declining to hear the case.
A few weeks after the ruling, California Gov. Gavin Newsom held a press conference in Los Angeles while visiting the pro bono law firm Public Counsel. Here it was announced that the $331 million won back by Bautista, Montelongo and others would be used to fund nonprofit law firms in providing legal assistance and counseling. The plaintiffs, however, argue the legal assistance is not an effective means to help.
“And typically when you get to a point already where the money — there’s a pot of money that needs to be utilized in the way that it was supposed to — you would bring in the parties that were involved and say, ‘how do we work this out,’ and ‘we want feedback from you,’” Montelongo said. “I mean to me that’s just common sense.”
However, there may be progress on the issue. Bautista and Montelongo have both been working with the state to find a better use of the $331 million. Mark Tollefson, deputy cabinet secretary for the governor’s office, has been the liaison for their efforts. Unfortunately, Bautista says five years have been lost and with that time, other homeowners have seen their houses foreclosed on, while renters were driven out by high prices.
“So because of that, we’ve got the money after five years, we want them to use the money to help those homeowners that suffered,” Bautista said. “Because they did not get help.”
On Dec. 12, the plaintiffs submitted their proposal on the best way to use the money. In it, they laid out the “five critical opportunities” to utilize the funds.
The priorities include: Community input; loans to Qualifying Financing Organizations; funding of state community development tax credit programs (revitalization for areas impacted is a major priority for Bautista, Montelongo and others); bond guarantees to qualifying organizations and; fund of grants to nonprofit and faith-based organizations.
“But I feel like we do not have to beg,” Bautista said. “I think they should do what they needed to do in the first place.”