AG: Homeowners can seek hotline after mortgage settlement

Illinois Attorney General Lisa Madigan says homeowners who believe they're entitled to reimbursements from a multi-state settlement with large mortgage lenders or who have questions can contact a help line set up by the office.

Illinois is expected to get $1 billion of the roughly $25 billion settlement announced Thursday.

It involves allegations of widespread "robo-signing" of foreclosure documents and other fraudulent practices. Robo-signing is having employees sign papers they haven't read or using fake signatures to speed foreclosures.

Madigan's office says the money will be used to help Illinoisans who've lost homes, are at risk of defaulting on their mortgages, or owe more than their homes are worth. The settlement also will overhaul standards to prevent abuses.

Gov. Pat Quinn said Thursday that the settlement reached between 49 states and five mortgage giants will help those most affected by the housing crisis. Quinn says the settlement significantly eases the way for families to modify the terms of their mortgages.

The five major banks that settled with the states are: Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial. The settlement money would reimburse American homeowners and help overall standards to prevent future abuses.

The deal is the biggest involving a single industry since a 1998 multistate tobacco deal. It would force the five banks to reduce loans for about 1 million households. The reduced loans would benefit homeowners who are behind on their payments and owe more than their homes are worth.

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