California urged to return $331M meant for homeowners

SACRAMENTO, Calif. (AP) — Several California lawmakers and community assistance groups are calling on Gov. Jerry Brown to repay more than $331 million in funds intended to help homeowners struggling with foreclosures that the state siphoned off to help deal with its budget crisis.

A Sacramento County judge found that the governor and state Legislature unlawfully diverted most of a fund that was part of a $25 billion settlement between five major banks and nearly every state in 2012.

Brown’s attorneys argued the state had the discretion to use that money in the state budget. But the judge sided with the community assistance groups in ruling the money should be used to help California homeowners affected by the mortgage crisis. The ruling by Sacramento County Superior Court Judge Timothy Frawley was issued last month, but it has not been finalized.

The Democratic governor hasn’t decided if he will appeal, according to his  finance department spokesman, H.D. Palmer.