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October 11, 2012

MADIGAN ANNOUNCES $650,000 GRANT TO SUPPORT FREE LEGAL HELP FOR CHICAGO AREA HOMEOWNERS FACING FORECLOSURE

Attorney General Distributes Funds from National Foreclosure Settlement

Chicago — Attorney General Lisa Madigan today announced that nearly $650,000 in funding from the national foreclosure settlement has been awarded to Chicago’s Legal Aid Society of Metropolitan Family Services.

The Attorney General made the announcement today at the Legal Aid Society’s Equal Access to Justice event in Chicago. Madigan said the grant will help provide legal representation and advocacy services to homeowners who are facing foreclosure on Chicago’s south side and surrounding suburbs that have been among the hardest hit by the foreclosure crisis.

“There is no substitute for legal representation when facing foreclosure, yet a majority of homeowners do not have a lawyer to advocate on their behalf,” Madigan said. “Through this grant, many more Chicago area homeowners will now have a voice in the justice system.”

The funding stems from her role in securing a $25 billion national settlement in February with the nation’s five largest bank mortgage servicers – Bank of America, JPMorgan Chase, Wells Fargo, Citibank and Ally Bank, formerly GMAC. The settlement addressed allegations of widespread “robo-signing” of foreclosure documents and other fraudulent practices bank servicers engaged in while servicing loans of struggling homeowners.

As part of the national settlement, Madigan’s office recovered money from the banks to remediate the historic levels of foreclosure in Illinois. Today’s announcement is among the first distributions of that funding, which as a whole will benefit legal assistance programs, housing counseling services and community revitalization efforts. Madigan announced in April she would commit to distribute $20 million of the funds recovered in the settlement to legal aid services. The Attorney General’s office is continuing to analyze grant proposals toward that goal.

Founded in 1886, the Legal Aid Society of Metropolitan Family Services is the oldest provider of legal services to low-income people in Chicago and the second oldest in the country. LAS advocates provide free legal assistance to low-income families, including victims of domestic violence, children and seniors. In fiscal year 2012, LAS served the legal needs of 7,879 low-income people and provided social services to many of those clients through its parent organization, Metropolitan Family Services.

The three-year, $649,164 grant will be used to launch the organization’s Focus on Foreclosure Initiative, which is an extension of its Poverty Law Project, to aid borrowers in Cook County’s hardest hit communities. The organization will hire a full-time attorney to provide assistance to communities on the south side of Chicago and the southern suburbs, and it will hire a full-time paralegal to work out of the organization’s Blue Island and Palos Hills offices and the Cook County Courthouse in Markham. LAS will also use the grant funding to support the positions of current attorneys and a paralegal as it expands its foreclosure-related services. By funding the work of these attorneys and paralegals, the grant will allow LAS to continue helping families who have been hit the hardest by the foreclosure crisis.

“This funding will make a tremendous difference. Foreclosure work is time-consuming and detailed. Up to now, these cases have had to compete with all the other urgent requests that come to us. With this funding, we can devote two additional full-time staff to helping families in communities that have born the brunt of the foreclosure crisis in Illinois,” said Kendra Reinshagen, Executive Director for the Legal Aid Society.

In addition to the cash payments directed to the state, Illinois borrowers will receive an estimated $1 billion in direct relief as a result of the national settlement to assist those who have lost their homes, are underwater or at imminent risk of defaulting on their mortgages. The settlement will also completely overhaul mortgage servicing standards to prevent future abuses by lenders.

Consumers seeking more information on the national settlement can contact Madigan’s Homeowner’s Helpline at (866) 544-7151, or visit her website, www.illinoisattorneygeneral.gov/consumers/bankforeclosuresettlement.html. Borrowers also can visit www.NationalForeclosureSettlement.com.

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