More than $1 Billion in Mortgage Relief for Illinois Families
CHICAGO, IL – February 13, 2012 – (RealEstateRama) — Governor Pat Quinn today announced that Illinois mortgage regulators have joined with their counterparts across the country to accept the terms of a national settlement with five of the nation’s largest banks. Under the settlement, more than $1 billion will go to help struggling Illinois homeowners and those affected by improper foreclosures.
The settlement will provide direct assistance to distressed homeowners, including helping them to change the terms or payments of their mortgages so they can stay in their homes. The settlement will also provide monetary awards to families who lost their homes due to faulty foreclosure proceedings, and will reform the mortgage servicing practices that led to the problems faced by tens of thousands of Illinois families.
“Over the past years, we’ve seen how the flawed mortgage financial system has hurt Illinois families, and I want to thank Attorney General Lisa Madigan for her advocacy on this issue,” Governor Quinn said. “This settlement will help those most affected by the housing crisis, and will establish new rules for mortgage lending that will be easier to understand and enforce.”
The settlement significantly eases the way for families to modify the terms of their mortgages. For families that are at risk of default, money has been set aside to help reduce the principal balance on the loan and reduce monthly mortgage payments.
The settlement also provides direct help to homeowners who owe more on their mortgage than the current value of their homes. The banks will also allocate funds to reduce the principal balance, approve short-sales (where the property is sold for less than the balance on the mortgage, with the bank’s approval) and allow for unemployed payment forbearance, which defers payments for homeowners who are between jobs. Under the terms of the settlement, the five lenders are barred from starting foreclosure proceedings on mortgage loans while the homeowner is in negotiations on loan a modification.
The State’s Department of Financial and Professional Regulation (IDFPR) is responsible for overseeing the activities of mortgage lenders and servicing companies. It has aggressively targeted mortgage fraud and sloppy or illegal loan processing and servicing. The settlement also includes $1 million for the state agency that will be used by IDFPR to continue its ongoing investigative and enforcement work.