Helping Illinois Homeowners

Several years ago, it became clear that mortgage lenders were placing unsuspecting Illinois homeowners into loans that they did not understand, could not afford and had no realistic way to repay. Add to that the poor economy, declining home values and rising unemployment, and Illinois faced an epidemic of home foreclosures. These conditions not only directly impacted those who, often through no fault of their own, were unable to pay their mortgages, but also threatened the value of virtually every Illinois home and the stability of entire communities.

As a national leader in holding Wall Street accountable for fraudulent mortgage lending and servicing, Attorney General Lisa Madigan has provided $3.2 billion in relief for Illinois homeowners, communities and pension systems so far. 

Attorney General Lisa Madigan took immediate and aggressive action to bring relief to homeowners facing foreclosure. In October 2008, she negotiated a landmark settlement against Countrywide, the nation’s largest mortgage lender, for predatory mortgage lending and fraud. The Countrywide settlement, hailed as a model nationwide, pioneered the country’s first mandatory loan modification program. As a result of this settlement, approximately 400,000 homeowners across the country are expected to receive modifications of their loans with a total savings of $8.7 billion. That means approximately 21,000 Illinois homeowners will receive consideration for loan adjustments, from which $185 million in modifications are expected.

Lisa Madigan did not stop at just predatory lenders. In the wake of the foreclosure crisis, many scam artists have attempted to swindle money from homeowners who are behind on their mortgages by making big promises to assist with mortgage modifications, collecting a large up-front fee, and then doing nothing to help the homeowners. In response, Attorney General Madigan drafted the Mortgage Rescue Fraud Prevention Act, which is now law.  She has used this new law to crack down on these fraudulent mortgage “rescuers” with investigations and lawsuits.

The Office of the Attorney General also offers Illinois residents unprecedented assistance through a homeowner helpline that assists homeowners in financial distress. This helpline (1-866-544-7151) has already offered valuable service to thousands who are struggling to save their family homes.

Attorney General Madigan has also gone after mortgage lenders who engaged in discriminatory lending. In August 2009, the Attorney General filed suit against Wells Fargo and in June 2010 again sued Countrywide for predatory lending, consumer fraud and illegally steering minority homebuyers into sub-prime loans. An investigation by the Office of the Attorney General indicated that minority homebuyers were much more likely to be placed into high-cost, sub-prime loans than non-minority buyers with similar credit scores.

The 2009 suit against Wells Fargo resulted in a $175 million joint settlement with Attorney General Madigan and the U.S. Department of Justice.  The settlement, announced in July of 2012, provides for a minimum of $15 million in restitution for Illinois borrowers with loans that originated between 2004 and 2009.

In December 2011, Attorney General Madigan and the U.S. Department of Justice reached a record-breaking $335 million settlement with Countrywide over claims of discriminatory lending practices.  The joint settlement is a result of Madigan’s June 2010 lawsuit and years of investigation by her office into Countrywide’s lending practices and policies during the years leading up to the housing market’s collapse.

Another landmark settlement was announced in February 2012 by State Attorneys General across the country, including Attorney General Madigan, and the federal government.  The $25 billion settlement was reached with the nation's five largest banks for their alleged participation in widespread "robo-signing" of foreclosure documents and other fraudulent practices while servicing loans.  The settlement not only provides direct relief to homeowners in danger of losing their homes, it also reforms mortgage servicing standards to better assist and protect borrowers.

These lawsuits are part of Attorney General Madigan’s unwavering commitment to helping Illinoisans during this unprecedented housing and financial crisis.

Michelle Young