The $25 billion national mortgage foreclosure settlement is making its way to homeowners in Illinois and elsewhere. As of June 30, 5,268 Illinois homeowners have received more than $357 million in relief as a result of February's settlement with the nation's five largest mortgage servicers over shoddy foreclosure practices, according to a report released Wednesday by the independent monitor of the settlement.
Almost half of those Illinois borrowers, 2,555, participated in a short sale of their home or completed a deed-in-lieu of foreclosure -- giving up their home in return for the mortgage getting ripped up -- with their servicer. Others received loan modifications, principal reductions and refinancings. State officials expect to see an increase in loan modifications and principal reductions in coming months.
Nationally, the servicers -- Bank of America, CitiMortgage, Ally Financial, JPMorgan Chase and Wells Fargo -- reported that they granted $10.56 billion of relief to 137,846 borrowers between March 1 and June 30.
Almost $8.7 billion of that national relief involved about 75,000 borrowers either completing a short sale or a deed-in-lieu of foreclosure. In those cases, the servicers are waiving unpaid principal balances due, according to the report.
According to the state, Illinois ranks fourth in total number of borrowers who have received assistance.
"I am cautiously encouraged by the initial progress reported by the independent monitor," said Attorney General Lisa Madigan, who helped negotiate the settlement. "We're starting to see real results for Illinois families.
Joseph Smith Jr., the independent monitor, noted that the information was reported by the companies and had not been audited or confirmed by his staff at the Office of Mortgage Settlement Oversight.
Mortgage servicers also improved their practices, the report said. They have until Oct. 2 to comply with more than 300 standards.
Under the settlement, participating states also have received funds, and Illinois has begun disbursing its $106 million share. On Tuesday, Madigan announced a $4.7 million grant to the Legal Assistance Foundation of Metropolitan Chicago to help it provide services to homeowners in the city and suburban Cook County. Last week, $4.5 million was awarded to the Land of Lincoln Legal Assistance Foundation to assist homeowners in central and southern Illinois.
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