The housing research firm RealtyTrac recently released a new set of data about foreclosure activity in the third quarter of this year. Simply put, the situation remains ugly in Illinois. Between July and September, banks repossessed 13,460 properties in the Land of Lincoln, a number that will add urgency to the widening dragnet into the banks' foreclosure practices. Yesterday, attorney generals from across the country, including Illinois' Lisa Madigan, announced they are joining with state regulators to investigate the use of robo-signers and the improper legal affidavits they churned out in foreclosure proceedings.
Many large banks have frozen foreclosures in the wake of the scandal.
The attorney generals could start filing fraud cases as their inquiry
digs into the extent of the issue. Madigan ripped the banks for putting millions of people into questionable loans and now wanting those people (and loans) to disappear.
"Foreclosure is a fresh start for the lenders, who were way too eager to
write high-risk, high-cost loans," she wrote at the Huffington Post. "It is a chance to bury evidence of
their misdeeds and move on to a new buyer and new revenue."
The political and economic shocks stemming out from this situation aren't exactly clear yet. Madigan, meanwhile, said in a statement she wants new legislation that would "ensure each homeowner know[s] the amount they owe, who owns their loan, the terms of their original loan, and whom they can contact" during foreclosure proceedings. She also said she'll push for a federal "cramdown" bill allowing judges to reduce the principal amount on loans, thereby helping to keep distressed homeowners in their residences. Advocates have long sounded the alarm about getting the banks to execute more meaningful write-downs and loan modifications. It's a critical tool.