March 14, 2014; New York Times


This lawsuit could have been spotted from miles—or months—away. Governor Jerry Brown used $369 million that California had received as part of a $25 billion nationwide mortgage-serving settlement agreement to pay down the state’s debt rather than helping homeowners with avoiding foreclosure. Three nonprofit housing counseling groups have decided to file suit against California, demanding that the money be restored back to its original purpose. The fact that the state is looking at a $4.2 billion budget surplus this year moots the need for writing down the state’s debt. 

“We made it clear to the governor at that time that we did not agree with his decision,” said Robert Gnaizda, general counsel to the National Asian American Coalition, one of the plaintiffs in the suite. “But we didn’t want to bring a case when the state was in such an enormous fiscal crisis. With the governor now talking about possible surpluses of up to $10 billion before he finishes his second term, we decided to proceed with our case.” The other plaintiffs are the COR Communi