Latest Post | Last 10 Posts | Archives
Previous Post: Question of the day
Next Post: US Sen. Kirk moved from Northwestern to Rehabilitation Institute of Chicago
Posted in:
* At least two neighboring states, Missouri and Wisconsin, plan to use money from the national foreclosure settlement to help balance their budgets…
The Missouri House Budget Committee chairman said today that he supports Gov. Jay Nixon’s proposal to use $40 million of a multi-state bank settlement to ease higher education budget cuts.
Gov. Scott Walker, who joined Van Hollen for the announcement, says about 18 percent of the settlement – or $25.6 million – will go into the state’s general fund.
Milwaukee Mayor Tom Barrett begs to differ. After hearing Walker’s plan, Barrett called a news conference to urge the governor and attorney general to return the funds to the communities, instead of using them to balance the budget.
* Overall, the national settlement will require about a billion dollars to be spent in Illinois compensating mortgage holders who were victims of robo-signing schemes and to lower principal on certain mortgages.
Illinois’ governmental share is about $100-110 million, according to Attorney General Lisa Madigan. AG Madigan told me today that the settlement creates a special trust fund in Illinois, controlled by her office, which she will then use to keep people in their homes.
*** UPDATE *** AG Madigan’s staff just contacted me to further clarify Madigan’s comments on the trust fund. This is actually a federal trust fund and Illinois’ share is $100-110 million. That money, per the settlement, will be overseen by the AG’s office.
* Asked about other states which are using the cash for their budgets, Madigan said that while she understood the states’ financial problems, the settlement was all about the mortgage issue and the money ought to go for that.
“The one sector of our economy that is showing no signs of recovery is the housing market,” Madigan said. “One of the best things you can do is to make resources available to help people pay on their mortgages and stay in their homes. That will help our state economy… That’s what this was all about. That’s what [the money] should be used for.”
* Madigan also pushed back against reports like this one…
The $25 billion settlement with banks over foreclosure abuses may result in a wave of home seizures, inflicting short-term pain on delinquent U.S. borrowers while making a long-term housing recovery more likely.
And this one…
The deal could help break a logjam that has stalled foreclosures from moving through courts, a scenario that has allowed some delinquent homeowners to stay in their homes more than two years without making any mortgage payments.
According to Madigan, the banks “paused” foreclosures for a couple of months, but she did not believe there was a large backlog that would suddenly create a flood of foreclosure proceedings. She also noted that part of the proceeds from the $100 million will go to some legal aid groups to help homeowners facing foreclosure.
* There is another school of thought, particularly with some liberals, that the $2,000 people can get if their mortgage documents were robo-signed translates into: “They stole my house, I got $2,000.” But the robo-signing doesn’t mean that people necessarily lost their homes when they shouldn’t have. If a home was actually taken without cause, another program, run through the Office of the Comptroller of the Currency, will make former homeowners whole, Madigan said. That program has an application deadline of April 30th.
As for other issues involving the mortgage meltdown, Madigan said, “This was not intended to address every issue, it’s purely focused on robo-signing and the complete overhaul of servicing standards.” Her office also released a document entitled “Setting the Record Straight about the Bank Foreclosure Settlement.” Click here to read it.
* Related…
* AG: Homeowners can seek hotline after mortgage settlement
* Quinn: Mortgage settlement will help Illinoisans
* Madigan: Illinois to get $1 billion as part of multi-state mortgage settlement
posted by Rich Miller
Friday, Feb 10, 12 @ 1:47 pm
Sorry, comments are closed at this time.
Previous Post: Question of the day
Next Post: US Sen. Kirk moved from Northwestern to Rehabilitation Institute of Chicago
WordPress Mobile Edition available at alexking.org.
powered by WordPress.
I wonder if Speaker Madigan shares this thought.
Comment by Michelle Flaherty Friday, Feb 10, 12 @ 1:49 pm
Does the AG have the authority to determine or dictate how these funds will be allocated or spent? I thought that the legislature was in charge of appropriations.
Comment by Foxfire Friday, Feb 10, 12 @ 1:50 pm
It’s not going to GRF, Foxfire, the cash is going to the trust fund.
Comment by Rich Miller Friday, Feb 10, 12 @ 1:53 pm
Rich, I second Foxfire’s question. Somehow I think the General Assembly should have some say in how $100 million is doled out. Giving an elected official that much money without constitutional oversight seems a bit excessive, especially since this was a shakedown to begin with.
Did the state use private attorneys to sue? How much will end up in their pockets? What groups will get this money?
I guess I’ve got a problem with the state giving people money to pay off their mortgages, when their situation is likely their own fault for buying a house they couldn’t afford in the first place.
Comment by Downstate Illinois Friday, Feb 10, 12 @ 2:02 pm
We’ll see what the ILGA has to say about that after they start calls and letters from all the people about to be hit by our budget.
Comment by Shock & Awww(e) Friday, Feb 10, 12 @ 2:04 pm
Check the update, people. The GA couldn’t get their hands on this money if they tried because of the way Madigan had the settlement structured.
Comment by Rich Miller Friday, Feb 10, 12 @ 2:06 pm
The money is from a settlement resulting from proceedings initiated by the attorney general’s office. I think it makes sense that the money would be controlled by the AG’s office and not the general assembly that had nothing to do with this money coming back to the state.
I am curious though what the situation was/is with the money from the tobacco settlement and how this compares.
To me, the Wisconsin AG and gov using this money for the budget rather than housing issues looks like them stealing from homeowners/citizens to avoid making tough choices on the budget.
Comment by hisgirlfriday Friday, Feb 10, 12 @ 2:08 pm
According to U.S. Census data, there were 5,296,715 housing units in Illinois in 2010.
Let’s say roughly 250,000 of them (need a more accurate #) are impacted by this foreclosure settlement.
You can mail each of them a $4,000 check (less after fees), which still won’t compensate them fairly for the loss of their home.
Or you can use part of that to help the sick, weak and poor - and still send a $3,500 or %3,750 check.
Something tells me that if there’s a way around this, someone in the Gov.’s office or ILGA will find it.
Comment by Shock & Awww(e) Friday, Feb 10, 12 @ 2:13 pm
“To me, the Wisconsin AG and gov using this money for the budget rather than housing issues looks like them stealing from homeowners/citizens to avoid making tough choices on the budget.”
That was my read too.
– MrJM
Comment by MrJM Friday, Feb 10, 12 @ 2:13 pm
$100 million? Sheesh. Will read the settlement tonight, but if our state just gave up the right to sue for $100 million, we just got the raw end of a very sharp stick.
There are currently over 3,000 news sources on google saying IL will receive $1 billion.
If we really only got $100 million, what happened?
Los Angeles County alone is getting $4 billion. And our whole state gets less than 1/10th of that?
Something seems off here.
Comment by Shock & Awww(e) Friday, Feb 10, 12 @ 2:18 pm
===There are currently over 3,000 news sources on google saying IL will receive $1 billion.===
Slow down and improve your reading comprehension. IL homeowners are getting the $1 billion.
Comment by Rich Miller Friday, Feb 10, 12 @ 2:19 pm
It is wise to keep this money out of the hands of the governor or legislature. Heaven only knows how it would be used. It speaks volumes that our state government is so distrusted when it comes to money.
Comment by Aldyth Friday, Feb 10, 12 @ 2:21 pm
- I guess I’ve got a problem with the state giving people money to pay off their mortgages, when their situation is likely their own fault for buying a house they couldn’t afford in the first place. -
Yeah, obviously those poor bankers were fooled by these folks claiming they could afford these homes. Get a clue, lots of folks definitely got in over their heads, but none of them went in with a gun and forced the banks to lend.
Comment by Small Town Liberal Friday, Feb 10, 12 @ 2:23 pm
A few thoughts-
1) Very disappointing that AG Madigan has decided to earmark the money in this way, given our state’s financial woes.
2) Sometimes folks accuse Lisa Madigan of doing whatever her father wants, and this is some clear evidence that she doesn’t do that
3) But I do wonder that if the AG wasn’t his daughter, would Speaker Madigan be pushing harder (not legally, but PR-wise) for at
least part of the money to help balance the state’s budget, as other states are doing?
Comment by Robert Friday, Feb 10, 12 @ 2:39 pm
Illinois has to operate with a balanced budget but somehow always finds a way around that. They will find a way to get to this money…they always do
Comment by Informer Friday, Feb 10, 12 @ 2:52 pm
Um, just a reality check, folks.
State spending is constrained by COFGA revenue projections.
So unless we are going to reopen that statute, all this “windfall” talk is useless hand-wringing.
The AG is absolutely right to stick to her guns on this one. The lawsuit and its settlement were on behalf of homeowners.
There’s a fair argument to be had about whether the settlement is a good deal for homeowners. Whether a seven year legal battle and 20 year payment schedule would have been better.
But there’s really no arguing who the settlement should go to.
Comment by Yellow Dog Democrat Friday, Feb 10, 12 @ 2:57 pm
Yeah, obviously those poor bankers were fooled by these folks claiming they could afford these homes. Get a clue, lots of folks definitely got in over their heads, but none of them went in with a gun and forced the banks to lend.
anybody that ever takes a chance to better themselves gets in over their head at times….you just have to dust yourself off and go on….without a handout….what ever happened to personal responsibility?
Comment by way south of chicago Friday, Feb 10, 12 @ 2:59 pm
This AG is probably the only elected official who I would trust to handle the money. So far she seems to be one of the few who is not completely self-serving.
Comment by cynically anonymous Friday, Feb 10, 12 @ 3:00 pm
- what ever happened to personal responsibility? -
Please, banks were pushing people to get in over their heads because they believed property values would never stop rising. Well, guess what, they did. Sure people need to take responsibility for their finances, but there have to be safeguards and penalties against those who try to take advantage. Otherwise you get what we got, a group of seemingly legitimate conmen who helped drive our economy in the ditch.
Comment by Small Town Liberal Friday, Feb 10, 12 @ 3:09 pm
This isn’t the first settlement with restricted access. Take a pill people.
Comment by Demoralized Friday, Feb 10, 12 @ 3:39 pm
So a $25 billion fine, but no admission of criminal conduct. Unbelievable. Would you cough up $25 billion for not doing something illegal?
If you follow the trail since Lehman went down, a lot of Masters of the Universe did terrible, terrible things, for which they agreed for their companies to pay billions upon billions in fines, as long as they could say they did nothing wrong.
Cost of doing business for them. But it was a reckless gut punch to the world from the Masters of the Universe.
Comment by wordslinger Friday, Feb 10, 12 @ 4:02 pm
This whole “personal responsibility” thing rings a little false to me. When Soccerdad and I bought our first house, we were feeling kind of gulpy about the mortgage payment (which was, I believe, something like $700/month. Sigh.) Our realtor was quick to reassure us that the bank wouldn’t allow us to get in over our heads — that they had underwriters looking very closely at our loan applications, and that we would be denied if the numbers didn’t line up.
Funny, but I don’t recall a huge public information campaign by the banks saying, “Hey, folks, we don’t care about underwriting any more. You’re on your own!”
Not to mention — am I the only person who has gone through job loss in this recession? What you can afford when you’re working is a lot different than what you can afford when you’re not — although maybe it was my “personal responsibility” to know that my company was going to go through a huge upheaval and sale that left hundreds of people out of work….
Comment by soccermom Friday, Feb 10, 12 @ 4:19 pm
Rich - reading comprehension apparently goes out the window when I’m rushing out the door ;0. Still have to read the settlment, but it’s positive to see that $100-$110 million will go to “Illinois governmental share”.
That’s an unexpected, unbudgeted $100 million that can fund things like The Autism Project, homeless services, etc.
Comment by Shock & Awww(e) Friday, Feb 10, 12 @ 4:19 pm
===That’s an unexpected, unbudgeted $100 million that can fund things like The Autism Project, homeless services, etc. ===
LOL
Again, reading comprehension. Slow down and read before you comment, please.
Comment by Rich Miller Friday, Feb 10, 12 @ 4:22 pm
As the AG said, this is only a small part of the problem-set causing the mortgage crisis, related to technical processing errors at banks that were easy to prove, and thus is only a small part of any recovery for homeowners.
The bigger causes: secondary markets and derivative trading that flew out of control because any regulators either did not catch up, or were removed in the 80’s and 90’s, entry into mortgage lending by personal finance companies with no expertise (Countrywide, Household) start up mortgage brokerage companies that directly misled and defrauded both customers and lending banks, (many of whom no longer even exist), invention of new markets and credit default swaps by big insurance companies (like AIG) based on nothing but empty valuation and speculation (Dick Grasso, who ran the NYSE, calls this the “on-line casino”), ratings agencies who were blind, keeping investors in the dark. A classic and clear case of an entirely “free market” without proper boundaries to protect all of its participants.
Unfortunately these other players, who caused more of this disaster than even the banks, and paid themselves handsomely, aren’t as easy to catch and make accountable. As Obama said, no one is saying this is fair to homeowners, but it’s a step in the right direction.
Comment by mark walker Friday, Feb 10, 12 @ 4:28 pm
“Illinois”, “Trust” and “Fund” don’t belong in the same sentence.
Comment by Don't Worry About the Government Friday, Feb 10, 12 @ 4:31 pm
Son of a… ;0! OK, now I’m going to read.
Guess that blindness by wishful thinking. I WISH her office would consider releasing 10% - 20% of those funds for other services.
It’s definitely Friday… mentally and physically. I’m out!
Comment by Shock & Awww(e) Friday, Feb 10, 12 @ 4:34 pm
This is an absolute crap settlement. If it was just “robosigning”, that would be one thing. But the mortgage services and the TBTF banks just got a golden “get out of jail free” card.
It’s not $25 bil in cash, much of it is in credits and offsets. And the devil(s) are in the details.
There’s a whole bunch of reasons this is a really sorry deal for taxpayers. What they don’t tell you is that most of the mortgage mods are actually going to be on 1st mortgages, which the banks don’t own. They’ve been securitized (MBS, anyone?) and sold to investors, with a substantial portion going to Fannie and Freddie.
Guess who backstops Fannie and Freddie for any losses? We, the taxpayers. So this is really just another bank bailout!
And there’s more….
Thanks for nothing, Lisa. You sold us out.
Comment by Judgment Day Friday, Feb 10, 12 @ 6:59 pm