Attorney General Distributes Funds from National Foreclosure Settlement Over Banks’ Illegal ‘Robo-signing,’ Servicing Practices
O’Fallon – August 24, 2012 – (RealEstateRama) — Attorney General Lisa Madigan today announced that her office has distributed $4.5 million in funding from the national foreclosure settlement reached earlier this year to the Land of Lincoln Legal Assistance Foundation. Madigan said the grant will help to provide much-needed legal services to struggling homeowners in Central and Southern Illinois.
The Attorney General made her announcement today prior to a keynote address at the Foundation’s 40th anniversary celebration luncheon at the Regency Conference Center in O’Fallon. The funding stems from Madigan’s leading role in securing a $25 billion national settlement in February with the nation’s five largest bank mortgage servicers – Bank of America, JPMorgan Chase, Wells Fargo, Citibank and Ally Bank, formerly GMAC. The settlement addressed allegations of widespread “robo-signing” of foreclosure documents and other fraudulent practices the servicers engaged in while servicing loans of struggling homeowners.
As part of the national settlement, Madigan’s office recovered money from the banks to remediate the historic levels of foreclosure in Illinois. Today’s announcement is the first distribution of that funding, which as a whole will benefit legal assistance programs, housing counseling services and community revitalization efforts to counteract the historic levels of foreclosure throughout Illinois. Madigan announced in April she would commit to distribute $20 million of the funds recovered in the settlement to legal aid services. The Attorney General’s office is continuing to analyze grant proposals toward that goal.
“This grant money will translate into real help for homeowners who otherwise never would have received it, because the need far exceeds the current legal aid resources,” Madigan said. “By ensuring that more homeowners in Central and Southern Illinois have an advocate, we can give more people a fighting chance to save their homes and help stabilize communities throughout the region.”
The Land of Lincoln Legal Assistance Foundation provides free civil legal services to low-income people and older citizens in 65 counties in Central and Southern Illinois. The foundation was created to provide access to the justice system, empower people to advocate for themselves and make positive change in the communities the foundation serves.
“It is a great honor to be entrusted by the Attorney General with funding to help the victims of the current housing and economic crisis,” said Lois Wood, Land of Lincoln executive director. “This funding allows us to immediately triple the number of attorneys working with homeowners and to represent many homeowners who were previously ineligible for our help. We project that we will be able to represent more than 3,000 homeowners over the course of this grant, achieving work-outs for many of them that will allow them to stay in their homes.”
In addition to the cash payments directed to the state, Illinois borrowers will receive an estimated $1 billion in direct relief as a result of the national settlement. The direct-borrower funds will assist those who have lost their homes, are underwater or at imminent risk of defaulting on their mortgages. The settlement will also completely overhaul mortgage servicing standards to prevent future abuses by lenders.
Consumers seeking more information on the national settlement can contact Madigan’s Homeowner’s Helpline at (866) 544-7151, or visit her website, www.illinoisattorneygeneral.gov/consumers/bankforeclosuresettlement.html. Borrowers also can visit www.NationalForeclosureSettlement.com.