Struggling IL homeowners, renters to get $20 million piece of big mortgage settlement pie

Struggling IL homeowners, renters to get $20 million piece of big mortgage settlement pie
Creative Commons photo by Daniel Case

Illinois Attorney General Lisa Madigan announced Wednesday that $20 million will make its way to statewide programs aimed at keeping folks in their homes and providing mortgage relief.

That's thanks to Madigan's involvement in a national lawsuit against some of the country's biggest lenders, which ended in a $26 billion settlement earlier this year--the second largest ever by joint action of attorneys general around the country.

The lawsuit alleged that the country's five largest mortgage servicers--Bank of America, JPMorgan Chase, Wells Fargo, Citibank and Ally Bank, formerly GMAC--were involved in widespread "robosigning" and other fraudulent mortgage practices while providing loans and foreclosing on borrowers.

"When servicers robosign foreclosure documents with no firsthand knowledge of the case, it undermines the process and chokes off the foreclosure intervention points that the law provides," said Tom Feltner, vice president of the Woodstock Institute, which advocates for fair lending and housing.

Such lending practices are widely believed to have contributed to the mortgage and housing collapse, which snowballed into the country's full-blown financial crisis.

The national settlement doesn't throw everybody a bone, though: those with mortgages from Fannie Mae and Freddie Mac aren't covered.

But back to Illinois: the $20 million headed the Prairie State's way will fund legal assistance, financial counseling and will provide victims of predatory lending with mortgage relief, according to Madigan.

“We need to give homeowners a fighting chance to save their homes from foreclosure,” Madigan said in the press release. “The best way we can help is by providing distressed borrowers with legal representation to ensure they have an advocate to fight for them in the courtroom and that they will be treated fairly in the process."

This isn't the first time Madigan has legally tangled with predatory lenders. In 2008, she cited an investigation by The Chicago Reporter when she filed a lawsuit against Countrywide Financial Corp. for regularly steering Latinos and African Americans into sub-prime loans even when they qualified for better ones. That suit ended in a $335 million settlement.

She's also currently litigating a similar suit against Wells Fargo, in which she also gave props to another Reporter investigation for prompting action on her end.

The national settlement also aims to gradually improve the housing market by preventing foreclosures--no easy task.

Keeping folks in their homes is important for the residents as well as the surrounding properties. In a previous conversation with the Reporter, Feltner cited Woodstock Institute data when he said that a single foreclosure filing drops surrounding property values by one percentage point.

And, according to a recent ABC News report, Chicagoland has the third highest foreclosure rate when compared to a number of other large metro areas in the country. Here's the top 10 in that report:

1. Riverside-San Bernardino (one in 166 housing units)

2. Atlanta (one in 244 housing units)

3. Miami (one in 264 housing units)

4. Chicago (one in 302 housing units)

5. Tampa (one in 315 housing units)

6. Detroit (one in 332 housing units)

7. Los Angeles (one in 353 housing units)

8. Houston (one in 689 housing units)

9. Dallas (one in 724 housing units)

10. Boston (one in 1,403 housing units)

To find out if you are eligible for benefits and or assistance from the national bank foreclosure settlement, contact the Homeowner's Helpline at 1-866-544-7151. Or, visit the Attorney General's web page. 

© Community Renewal Society 2012

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