Nearly $50 million of the $97.8 million that Arizona received from settlements between big banks and state attorneys general was put into the state’s general fund, and may not be used for mortgage assistance, the Phoenix Business Journal reported May 2.

Homeowner lobbying groups and some Democrats have characterized the allocation as an unethical money grab by the Arizona Legislature. However, Republicans in the legislature argued that the housing crisis had depleted the state’s financial resources and therefore the money belongs in the general fund.

The money in question is part of the national $26 billion settlement state attorneys generals reached with the nation’s five largest servicers, as well as a settlement that Arizona reached separately with Bank of America.

The Journal reported that court settlement documents dictated that the $97.8 million was to be used for foreclosure prevention; prosecution of mortgage fraud; compensation for state losses related to mortgage fraud; and programs designed to prevent foreclosure, assist blighted communities and increase consumer protection.

Former Arizona Attorney General Terry Goddard expressed concern about what he considered a misuse of the settlement funds. “All Arizonans should be outraged,” he told the Journal. “Our state was one of the hardest hit in the mortgage meltdown and many homeowners are still in serious trouble. This money was specifically targeted by the court for homeowner relief, not for any other purpose.”

The Arizona Housing Alliance intends to sue the state to stop the budget transfer.