Kentucky to receive $19.2 million from mortgage fraud settlement

bmusgrave@herald-leader.comJuly 30, 2012 

Attorney General Jack Conway made remarks after winning the election at the Frankfort Convention Center for the Democratic election party on Tuesday November 8, 2011 in Frankfort, Ky. Photo by Mark Cornelison | Staff

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FRANKFORT — Kentucky will receive $19.2 million as part of a national settlement with the country's five largest banks over deceptive mortgage lending practices, Attorney General Jack Conway announced Monday.

The bulk of the settlement will go to programs that create more affordable housing, to legal assistance for those fighting to stay in their homes, and to programs that redevelop foreclosed properties. About $4 million will be used to update the Kentucky All Schedule Prescription Electronic Reporting program, commonly called KASPER. The program tracks prescriptions for pain pills and other controlled substances.

"This settlement will provide second chances to people who've lost their homes, help revitalize properties that have been abandoned and develop affordable housing in communities throughout out the commonwealth," Conway said in a written statement.

Conway made the announcement in Louisville, the Kentucky city hit hardest by foreclosures. According to data provided by Conway's office, banks foreclosed on 66,997 properties in Kentucky between 2008 and 2011. Of those properties, more than 16,000 were in Louisville.

Conway joined 48 other attorneys general in the lawsuit against Bank of America, JP Morgan Chase, Wells Fargo, Citi and Ally/MAC. A settlement was reached in March 2012.

Aside from updating KASPER, Kentucky's $19.2 million will go to the following entities:

■ $1.5 million to the city of Louisville. About $750,000 will help finance the city's abandoned-property program. An additional $250,000 will go to the Affordable Housing Trust Fund, which provides grants to affordable housing organizations.

■ $7.5 million to the Kentucky Housing Corporation. The organization will use an additional $7.5 million in federal matching funds for federal housing programs. About $1.5 million of the money will go to the Homeownership Protection Center, which provides counseling to consumers to help prevent foreclosures.

■ $1 million to Kentucky's four Legal Aid programs. The money will be used to assist homeowners going through foreclosure.

■ $150,000 to the Cabinet for Health and Family Services for lead-abatement programs.

■ $5 million to the Office of Attorney General to investigate mortgage and security fraud.

Conway's office will receive an update every month on how the $19.2 million is spent.

Beth Musgrave: (502) 875-3793. Twitter: @BGPolitics. Blog: Bluegrasspolitics.bloginky.com.

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