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

Nick Maroni | The Chicago Reporter

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.

Read more at Chicago Muckrakers Blog

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