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Arizona mortgage settlement fund sweep challenged in court

A lawsuit filed by public interest law firms on behalf of homeowners tries to block Arizona from using part of a foreclosure settlement to help balance the next state budget.

The budget approved by the Legislature and Gov. Jan Brewer takes $50 million of the $98 million settlement paid to the state by mortgage lenders and puts the money into Arizona’s main operating account. The settlement also provides aid directly to homeowners.

The lawsuit filed Thursday in Maricopa County Superior Court says the transfer violates terms of the settlement. Other allegations relate to constitutional provisions on legislation and branches of government.

Arizona Attorney General Tom Horne has said the transfer is poor public policy but that he’ll defend the decision made by the state’s policymakers.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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