From our friend Alejandro at the latimes.com:

About half of the $410 million flowing into California’s coffers from the national mortgage settlement with major banks will be pumped into the state’s housing counselors and legal services agencies that help struggling homeowners.

The funding is part of the plans disclosed Friday by state Atty. Gen. Kamala D. Harris for distributing the cash.

Harris, who helped negotiate the agreement with the nation’s five biggest banks, said she also plans to spend the rest of the money on reaching out to and educating homeowners stuck in the hardest-hit parts of the state; on further investigations and oversight of the settlement funds; and on helping borrowers who can’t stay in their homes.

“Homeowners who receive meaningful counseling are far more likely to avoid foreclosure,” said Shum Preston, a spokesman for Harris.

The cash the state received is part of $3.5 billion in total cash payments made to 49 states in the overall settlement with five of the nation’s biggest banks. The global settlement of accusations that the banks improperly or fraudulently foreclosed on homeowners provides $25 billion in aid to struggling borrowers.

“There are over half a million California households currently in the foreclosure pipeline, so we understand the importance of getting these funds into the communities where they’re needed and to the homeowners most affected by this crisis,” Preston said.

Community organizer Peggy Mears at the Alliance of Californians for Community Empowerment said funds need to go to African American and Latino families first because they were the hardest hit by the foreclosure crisis.

Mears said the money needed to go toward helping homeowners, not to filling the state’s budget deficit, as it has in other states.

“We need the highest levels of accountability for this money,” she said. “This settlement was for homeowners who were dealing with the foreclosure crisis.”

Housing counseling agencies across the U.S. have struggled in the face of the crisis, just as demand for their services has gone up.

The tough economy and a more competitive environment for nonprofits have hit counselors who provide foreclosure counseling, said Anna Lisa Biason, director of fund development for Neighborhood Housing Services of Orange County.

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