Governor Quinn announced that Illinois mortgage regulators will join 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 help distressed homeowners change the terms or payments of their mortgages so they can stay in their homes. It will provide direct assistance, plus monetary awards to families who lost their homes due to faulty foreclosure proceedings and add reforms to the mortgage servicing practices that led to the problems.
As tens of thousands of Illinois families face the risk of default the settlement will significantly ease the way families can modify the terms of their mortgages. It will help homeowners who owe more on their mortgage than the current value of their homes to readjust their mortgage once again to a lower rate. Or they can take advantage of bank allocated funds to reduce the principal balance. Homeowners will be able to get approved short-sales, where the property is sold for less than the balance on the mortgage, with the bank’s approval. The settlement will allow for unemployed payment leniency, 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.
“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.”
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