Attorney general won’t divert money to state from mortgage settlement

SPRINGFIELD – Other states may want to patch holes in their budgets with money from a nationwide mortgage settlement, but Attorney General Lisa Madigan opposes any attempt to do that in Illinois.

Illinois government is getting between $100 million and $110 million from the settlement over questionable home foreclosure practices by some of the nation’s biggest banks. That’s on top of roughly $1 billion in relief that will go directly to consumers.

Madigan spokeswoman Natalie Bauer said the attorney general’s office decides how to use state government’s share of the settlement and would reject any move toward diverting it to prop up Illinois’ shaky budget. Madigan, D-Chicago, will direct the money to programs that help people avoid losing their homes.

“This is about helping homeowners, and that’s what the money should be used for,” Bauer said.

The governors of Wisconsin and Missouri have proposed using their states’ money for needs unrelated to home foreclosures.

Illinois Gov. Pat Quinn, however, has not suggested using the settlement money for other purposes, despite the state’s severe financial problems. The settlement provides about $1 million for state regulators, and Quinn’s Department of Financial & Professional Regulation says it will devote that money to fighting mortgage fraud.

The national settlement, announced last week, involved complaints about shortcuts taken by banks as home values sank and millions edged toward foreclosure.

Many companies processed foreclosures without verifying documents. Some employees signed papers they hadn’t read or used fake signatures to speed foreclosures – an action known as robo-signing.

The states have agreed not to pursue civil charges over the abuses covered by the settlement.

Homeowners can still sue lenders on their own, and federal and state authorities can still pursue criminal charges.