Prompted in part by the recent crisis that swept through the housing market, in which mortgage services using "robo-signers" produced shoddy foreclosure filing documents, Illinois is clamping down on companies that are taking advantage of vulnerable homeowners.
Yesterday, the Illinois Department of Financial and Professional Regulation fined 11 unlicensed mortgage modification firms who have been charging families thousands of dollars to reduce the principal on their home even though free loan modification programs exist. Attorney General Lisa Madigan, meanwhile, has filed new legislation in Springfield (HB 6951) to bring transparency to the foreclosure process. Specifically, the bill would amend the Illinois Mortgage Foreclosure Act to require that banks provide a detailed summary of a borrower's payments over a 36-month period, giving homeowners clear data to contest a foreclosure filing if they feel they are making a good-faith effort to keep up with their payments. Madigan's bill would also force the lender to document in writing every effort they have taken to keep the homeowner in the home, including loan modification efforts. Just this week, Housing Action Illinois released a report stating that mortgage servicers in greater Chicagoland are dragging their feet on those modifications. From a release:
"Too often, Illinois families are struggling to pay their mortgages because banks put them into risky loans that they did not understand and could never afford. Now, we must make sure that banks are not violating the law as they try to take these families’ homes away," Attorney General Madigan said. "This legislation is designed to ensure that banks and loan servicers cannot cut corners or ignore homeowners’ rights in the foreclosure process."
The bill is currently in the House Rules Committee waiting to be assigned for a proper hearing. With one-in-three Chicagoland homeowners currently underwater, it's something to keep an eye on during this next few months.