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CHICAGO (CBS) – As part of a $25 billion nationwide settlement with the country’s five largest banks, struggling Illinois homeowners are expected to get about $1 billion to settle allegations of fraudulent and improper foreclosure practices.
Federal and state authorities across the nation have agreed to the settlement with Bank of America, JPMorgan Chase, Wells Fargo, Citibank, and Ally Bank, formerly GMAC.
Under the agreement, approximately $1 billion will go towards relief for Illinois homeowners who lost their homes, are underwater on their mortgages, or are at risk of defaulting on their home loans, according to Illinois Attorney General Lisa Madigan’s office.
LISTEN: WBBM Newsradio’s Regine Schlesinger reports
The case involved allegations of widespread “robo-signing” of foreclosure documents — the practice of employees signing foreclosure documents they have not reviewed or signing with fake names — and other fraudulent practices regarding home loans.
“After many months of investigation and negotiation, I’ve concluded that this settlement accomplishes two major goals: it provides timely help for struggling homeowners, and it establishes new rules for mortgage servicing that will protect homeowners in the future,” Madigan said in a news release. “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.”
Julie Jaloszynski of Lombard was widowed six years ago, then diagnosed with breast cancer and had to switch to a lower-paying job in order to get health insurance benefits.
She told WBBM Newsradio’s Regine Schlesinger she’s struggled to keep up with her mortgage payments, and she’s up nights worrying about losing her home.
“The harder I work, the farther behind I go,” she said. “I did nothing under-handed. I’m trying and struggling and really I just need a little bit of help. I don’t want them to pay off my mortgage for me. I want the ability to come out of this successful on my own. Just a little bit of help is all I’m asking.”
She said she hopes the settlement will make it easier for her to modify her mortgage or perhaps reduce the principal so that she and her two children can keep the roof over their heads.
The settlement will not help any homeowners get back property lost through any fraudulent foreclosure process. It also does not include mortgage giants Fannie Mae or Freddie Mac.
However, the settlement will provide some assistance to struggling homeowners in obtaining loan modifications and reducing the principal on their home loans to avoid foreclosure.
It also seeks to change some industry practices in an effort to avoid similar foreclosure problems in the future.
Madigan urged consumers seeking more information to contact her Homeowner’s Helpline, (866) 544-7151, or visit her website.