More than six months after the mortgage settlement deal was finalized, less than half that money has been put toward programs aimed at helping struggling homeowners, with numerous states instead diverting the funds to plug holes in their budgets. (David Zalubowski/AP)

The landmark settlement this year between the government and the nation’s largest banks over widespread foreclosure abuses set aside $2.5 billion to help states pay for housing counselors, mortgage mediation, legal aid and other efforts aimed at helping struggling homeowners.

But more than six months after the deal was finalized, less than half of that money has been put toward such programs, with numerous states instead diverting the funds to plug holes in their budgets.

States have announced plans to spend $977 million on foreclosure-prevention and housing efforts, and $989 million more has been shifted toward the states’ general funds or other uses unrelated to housing, according to a report released Thursday by Enterprise Community Partners, a nonprofit group based in Maryland. And $588 million has yet to be allocated, with Texas and Florida accounting for much of that figure.

According to the report, which details each state’s use of settlement funds, only 14 states have committed to putting their entire windfall toward housing programs. A dozen more have dedicated at least three-quarters of their funds toward such efforts.

The money flowing into state coffers represents only a fraction of the $25 billion settlement, which state and federal officials finalized in February. The deal forces the five banks involved — Wells Fargo, Citigroup, Bank of America, JPMorgan Chase and Ally Financial — to overhaul flawed and fraudulent foreclosure practices.

It also compels the banks to reduce loan balances for some homeowners, help others refinance into new loans at today’s historically low interest rates, and pay restitution to certain borrowers who have already undergone foreclosure. The banks have provided more than $10 billion in such relief, according to a preliminary report this summer from the independent monitor hired to ensure that the companies live up to their end of the deal.

The Enterprise report on Thursday highlighted how states have used their share of the settlement funds in significantly different ways — or not at all — and how the influx of cash led to “some very public disputes” in some states over how it should be spent.

Not surprisingly, some of the most intense disputes have been in California and Florida, which were hit hardest by the foreclosure crisis and also received the most money from the settlement. In California, Gov. Jerry Brown put the state’s $410 million share toward filling budget holes, though state Attorney General Kamala Harris, a fellow Democrat, wanted to use the money to help troubled borrowers. Florida officials are battling over who has the authority to decide how to use the money. Attorney General Pam Bondi says the decision is hers, and some lawmakers say the state legislature must approve any expenditures. In both states, hundreds of millions of dollars have been on hold.

In Arizona, the state legislature’s vote to divert as much as $50 million from the settlement funds to plug budget shortfalls prompted a consumer advocacy group to file a lawsuit, saying the money had been designated to help homeowners. A judge recently sided with the legislature, but an appeal appears likely.

In South Carolina, Republican Gov. Nikki Haley tried to veto the legislature’s attempt to divert a chunk of the state’s $31 million in settlement funds toward attracting businesses to the state, saying that she considered it “inappropriate to raid” funds meant to aid troubled homeowners. Lawmakers overrode her veto, sending $10 million to the state’s Commerce Department and the remaining $21 million to the general fund.

Shaun Donovan, U.S. secretary of housing and urban development, said in a recent C-SPAN interview that he had personally called certain state attorneys general and governors to tell them he thinks they’re “making a mistake” by diverting the settlement money for unintended uses. But he noted that the overwhelming majority of funds from the deal are “going to what we expected it to go to.”

Not every state has fought over how to use the settlement funds, the Enterprise report shows. In May, barely a month after a judge approved the mortgage settlement, Connecticut began dispersing its $28 million to help fund foreclosure hotlines, housing counseling and legal aid programs administered by the state government and nonprofit groups.

Funds also have begun to flow into similar programs in Ohio, Tennessee and other states. The District of Columbia, which received $4.4 million from the settlement, intends to spend all its funds on programs to keep struggling borrowers in their homes.