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"The lesson is advocates have to be vigilant," said Marie Cocco, a spokeswoman for the Campaign for Tobacco-Free Kids.
Most states will probably use the money for mortgage-assistance hotlines, mediation between borrowers and lenders, legal aid and financial counseling, said Geoff Greenwood, a spokesman for Iowa Attorney General Tom Miller, who was the lead negotiator on the settlement.
But, he added, officials "have to acknowledge that there has been damage done to states and their budgets and their services because of this mortgage crisis. … So states will have some flexibility in how they spend" the money.
Illinois Attorney General Lisa Madigan said she will oppose any efforts to use the money to prop up the state’s shaky budget.
California, which was one of the hardest hit states by the mortgage crisis, will receive the largest payment — about $430 million at a time when the state is facing a $9.2 billion deficit. A spokesman for Gov. Jerry Brown said no decision has been made on how to spend the money.
Some consumer advocates say they will be watching closely to see where the payments are spent.
"As insufficient as it is," said Kathleen Day, a spokeswoman for the nonprofit Center for Responsible Lending, "this money was intended to go directly to help struggling homeowners."
Tribune reporter Tom Harvey contributed to this story.
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