National Foreclosure Settlement Pays off For Illinois
Thanks to the much-maligned National Foreclosure Settlement, over 25 thousand struggling Illinois homeowners have received some sort of help with their out-of-wack home loans.
Over 3,500 mortgage owners have received permanent mortgage modifications with principal write-offs of more than $100,000. Over 8,000 homeowners had their second liens cancelled, and another 6,000 were allowed to sell their home for less than the amount owed.
In total, these 25 thousand Illinois homeowners received over $1.8 billion in mortgage assistance. Nationally, over 600,000 borrowers have received help, totaling over $50 billion. A clip of over $81,000 per borrower. While helping 600,000 Americans find help with mortgage trouble is certainly no failure, many still feel the original settlement has yet to reach its goals.
Illinois Attorney General Lisa Madigan says her office has seen an alarming pace of violations in regards to the new mortgage servicing requirements. More than 60% of loan modifications reviewed by her office had missing documents, and in over 45% of them loan servicers had to ask the homeowner for documents multiple times.
Joseph A. Smith Jr, the independent monitor assigned to the Foreclosure Settlement, says that so far only one of the five banks involved have fulfilled their requirements. In June he will be issuing his first report on the banks' compliance with the new servicing standards. Smith acknowledges that following his interviews and conversations with borrowers, lawmakers and industry professionals, he has concluded that there is still much work to be done; and he is in the process of developing new tests to measure how the banks are managing their new responsibilities.
While it certainly is alarming that banks are still making very simple documentation mistakes, it has to be incredibly encouraging that American homeowners have received over $50 billion in mortgage relief when the Foreclosure Settlement only required major banks to pony up half that amount. That means that government loan refinancing programs are also working, despite the struggles of programs like the HAMP.
Just as we have been asked to have patience with the sluggish economy, we should be equally patient with the implementation of policy that moved billions of dollars and requires thousands of people to change their routines. If there is any one lesson that life reinforces daily its that humans are indeed fallible.
By: Javi Calderon
