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Illinois Attorney General Lisa Madigan[/url] announced that she continues to lead the fight against mortgage and home repair fraud today by filing two lawsuits against mortgage brokers who sold complex mortgages to Illinois consumers. [/font][/color](The details of these lawsuits can be found in the two entries below this one). These suits are the first lawsuits filed by the Attorney General’s Office focusing primarily on the origination of mortgage products that have played a major role in the series of events leading to the current subprime mortgage foreclosure crisis. Today’s filings follow a number of lawsuits filed by Madigan targeting the subprime mortgage crisis, including eight suits against mortgage rescue scam artists that prey upon homeowners threatened by foreclosure.
“Like many Illinoisans desperately trying to save their homes, the victims of these two companies have been left with few options,” said Attorney General Madigan (pictured left). “My office is working overtime to stop deceptive practices that leave homeowners with unaffordable mortgages stripped of their equity and often forced to sell their homes in order to avoid foreclosure.”
It is alleged that these brokers put borrowers in loans without any regard for their long-term ability to repay the loans. Homeowners were enticed by low monthly payments and teaser interest rates. The homeowners were not told that loans with these terms would never be paid off. The homeowners also were not told that making the advertised payments would actually lead to an increase in the loan balance, or negative amortization.
In addition, as alleged in the complaints, the brokers abused lenders’ lax underwriting standards to put borrowers into complex mortgages. The brokers often qualified borrowers for mortgages without any documentation of the borrowers’ income and assets. Instead, the brokers used only stated income and assets. Unknown to the borrowers, their income and assets were frequently inflated by the brokers to qualify the borrowers for loans that they could not afford.
In one of the suits, it also is alleged that homeowners were lured into mortgages by promises of grants from government-sponsored home repair programs. In fact, the government-sponsored home repair programs were completely fictitious. The homeowners never received grants or home repairs completed to their satisfaction.
Hundreds of Illinois consumers have ended up in loans they will never be able to afford, paid large fees to mortgage brokers, paid money for home repairs they never received, lost equity in their homes, and, in some cases, are now at risk of foreclosure.
Madigan’s lawsuits seek both injunctive relief to prevent the companies and individual defendants from engaging in these activities in the future and restitution to assist the defrauded homeowners. In each lawsuit, Madigan’s office also is seeking a civil penalty of $50,000 per defendant, additional penalties of $50,000 for each act committed with intent to defraud, an additional $10,000 for each act committed against a senior citizen, and recovery of the cost of prosecution.

Resources for Consumers

As part of her ongoing efforts to protect consumers, Madigan urges consumers to seek help immediately if they are at risk of losing their homes. To help homeowners identify HUD-approved counseling agencies in their area, as well as to find other sources of legal and financial assistance, Madigan’s office has created A Guide to Prevention and Recovery Resources (with one version tailored to consumers in the Chicago area and another version focused on downstate). The Guide and other educational materials on predatory lending are available on Madigan’s Web site To view links in this forum your post count must be 10 or greater. Your post count is 0 momentarily.or by calling her office’s Consumer Fraud Hotline at: 1-800-386-5438 . Madigan also advised homeowners who believe they are victims of predatory lending to call the hotline and file a complaint with her office.
More information on how to guard against home repair and mortgage fraud can be obtained by calling the Attorney General’s Consumer Fraud Hotline at the following numbers:
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