Illinois Granted $1 Billion for Struggling Homeowners

February 10, 2012

If you followed Chicago Real Estate Forum during the rocky real estate year of 2011, then you know about the robo-signing controversy.

Now, it is 2012, and restitution has been served.

house in a life preserver on the water.Illinois Attorney General Lisa Madigan, along with the attorneys general in other states, sued the nation’s five largest bank mortgage servicers over the robo-signing allegations and have been granted a $25 billion settlement.

This is the second largest settlement ever obtained through a joint action of state attorneys general and will benefit 49 states; Oklahoma didn’t agree to the deal.

More than $1 billion will go to Illinois to assist homeowners who have lost their homes to foreclosure, are underwater on their mortgages or are at risk of defaulting on their payments with one of the five banks.

The settlement will also completely overhaul mortgage servicing standards to prevent anything like this from ever happening again.

“After many months of investigation and negotiation, I’ve concluded that this settlement accomplishes two major goals,” said State Attorney General Madigan. “It provides timely help for struggling homeowners, and it establishes new rules for mortgage servicing that will protect homeowners in the future.”

The robo-signing controversy involved lenders signing off on thousands of unchecked, and sometimes even fraudulent, paperwork to seize homes while servicing loans of struggling homeowners. To read more about it, click the Chicago Real Estate Forum link in the first paragraph.

The five banks involved are Bank of America, JPMorgan Chase, Wells Fargo, Citibank and Ally Bank, formerly GMAC. Loans owned or backed by Fannie Mae and Freddie Mac are not included.

You could be eligible to be part of the settlement if:

*You lost your home between January 1, 2008 and December 31, 2011 and one of those banks handled your mortgage payments.

*You owe more on your home than it is worth, you are 30 days or more behind on your mortgage payments or you are at risk of falling behind on your mortgage payments to one of those banks.

*You owe more on your home than it is worth, you are current on your mortgage to one of those banks and you are looking to refinance your loan.

If you fall into one of those categories and want to know more about the settlement, visit illinoisattorneygeneral.gov or call Attorney General Madigan’s Homeowner Helpline at 866-544-7151.

Tune back in to Chicagoland Real Estate Forum tomorrow, where we will outline the changes that will be made in the mortgage industry as a result of this settlement.

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