Robo-Signing Settlement Means Mortgage Reforms

February 11, 2012

Yesterday, Chicago Real Estate Forum wrote about the $1 billion Illinois is going to receive from a settlement granted over the robo-signing controversy.

Illinois Attorney General Lisa Madigan and other state attorneys general were granted a $25 billion settlement after suing the five largest mortgage servicers over the unethical and illegal practices carried out by lenders servicing struggling homeowners during the foreclosure crisis.

To read about that, and to find out if you qualify to be part of the settlement, click the link in the first paragraph.

house with an umbrella protecting itThe settlement was not only the second largest award ever obtained through joint action of state attorneys general, the win also means a complete overhaul of mortgage servicing standards.

Reforms will now be put in place to protect and better assist all homeowners who are in trouble with their mortgages. Before, borrowers ended up facing foreclosure no matter how much they tried to work with banks for assistance. Now, borrowers will be ensured a fair chance to save their homes.

The new reforms:

*Distressed home borrowers will be considered for a loan modification rather than being automatically referred to foreclosure.

*No loan will be referred to foreclosure while a loan modification is being considered.

*Borrowers will be allowed to appeal a denial of a loan modification.

*Mortgage servicers must provide a single point of contact for borrowers as well as easier methods for checking on the progress of their loan modification applications.

*Loan servicers will be held to strict timelines in dealing with distressed borrowers.

According to Madigan’s office, “protections will also be put in place to ensure fairness and accuracy for all borrowers making mortgage payments including increased disclosures on their monthly mortgage billing statements, maintenance of procedures to ensure the accuracy in the posting of mortgage payments, the posting of a schedule of all fees on their website, and the requirement that all fees must be reasonable, bona fide and accurate.”

Banks will be forced to comply with the new rules or they will be fined.

“While the settlement is a big step forward in our efforts, it is not the end,” said Attorney General Madigan. “In Illinois, we will continue to take strong legal action against lenders, banks, servicers and others who contributed to the housing and economic collapse.”

To find out more about the settlement, visit illinoisattorneygeneral.gov or call her Homeowner Helpline at 866-544-7151.

Categories: Economy, Mortgages

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