Banks' settlement will mean $400,000 for UI clinic to help homeowners, tenants

CHAMPAIGN — A government settlement with five of the nation's largest banks over their role in the foreclosure crisis will fund a University of Illinois legal clinic that helps homeowners and tenants affected by foreclosure.

Illinois Attorney General Lisa Madigan visited the UI on Tuesday to announce a $403,271 grant to the College of Law's Community Preservation Clinic.

Established in fall 2011, the clinic provides legal help to homeowners facing foreclosure in McLean County and tenants living in foreclosed properties in Champaign County.

The money comes from a $25 billion settlement in March 2012 between the federal government and 49 state attorneys general and the country's five largest mortgage loan servicers: Bank of America Corp., Citigroup Inc., JP Morgan Chase & Co., Wells Fargo & Co. and Ally Financial Inc.

The banks were accused of fraudulent practices, such as "robo signing" foreclosure documents, telling homeowners to stop making payments to qualify for loan modifications, and repeatedly losing documentation, Madigan said. The settlement created strict new standards for banks to follow, she said.

"The settlement at its heart is about holding banks accountable for years of inept, callous and illegal treatment of homeowners in distress," Madigan said.

The settlement will provide an estimated $1 billion of relief to Illinois homeowners in the form of refinanced loans or other modifications. A state-appointed monitor estimates about $800 million has been provided so far, Madigan said.

The state also received $100 million to counteract the effects of the foreclosure crisis, and the most effective way is to provide legal advocates for homeowners, she said.

Her office set aside $20 million for groups that provide legal services, including $4.5 million over three years to each of the three Legal Services Corp. offices across the state. One is the Land of Lincoln Legal Assistance Foundation, which takes in Champaign and Vermilion counties.

Other money has gone to nonprofit groups, including Equal Justice Works, which recently said it will fund a fellowship at the UI Community Preservation Clinic.

Clinic director Stacey Tutt said the $403,271 announced Tuesday will help support that fellowship position, allowing the clinic to expand services.

The clinic runs two programs, one working with homeowners in McLean County's Mandatory Foreclosure Mediation Program. So far the clinic has provided free legal representation to 100 clients through the program, helping homeowners reduce or modify their loans or achieve a "graceful exit" through short sales when needed, she said.

In Champaign County, law students at the clinic represent tenants caught up in disputes with landlords on the verge of foreclosure. Of the 59 tenant cases the clinic has handled so far, it's achieved positive results in 56, officials said.

"We have law students who are helping to save people's homes," Madigan said, while gaining legal experience helping real clients.

Madigan said having a lawyer more than doubles a homeowner's chances for a positive outcome in a foreclosure case. Yet the vast majority of homeowners don't get legal representation and end up losing their homes or paying more than they have to, she said.

Statewide, the number of foreclosures is still "very large," Madigan said. In 2012, there were almost 500 in McLean County and more than 200 in Champaign County, Tutt said.

Tutt said the clinic's efforts have reduced the costs of foreclosures for lenders, borrowers and taxpayers; reduced the number of foreclosure court cases and expedited the legal process; kept families in their homes; and addressed vacant and blighted properties that hurt property values and thus reduce tax revenue.

The new fellowship and additional funding for the clinic will allow it to train more law students, tackle more complex litigation and increase neighborhood canvassing efforts to reach tenants and homeowners who need help, she said. This semester, 11 law students are working at the clinic.

"Foreclosure touches on those most basic needs — safety, shelter, community," said College of Law Dean Bruce Smith. "Protecting homeowners and preserving community are worthy goals."

Afterward, Madigan turned aside questions about her gubernatorial aspirations, saying she enjoys serving as attorney general but is considering whether there are "additional ways to serve the public of this state. It is not a question I have finished answering."

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Bulldogmojo wrote on February 20, 2013 at 12:02 am

Brilliant! This fund has not paid out one dime to actual distressed homeowners and already more lawyers with empty promises have their hand in the money bag. I hope we are all aware that the original fund (also authored in part by Madigan) that had been operated for over a year under the sleepy eye of the Federal Reserve was shut down last month with over a billion dollars in fees missing! Sheila Baer of the FDIC remarked that the program was designed to fail from the beginning.

If Land of Lincoln or any of these other legal assistance services had any real power this crisis wouldn't have gotten this big in the first place. You've been had by the Wallstreet investment firms and all the lawyers that stand solidarity with them and I do mean ALL THE LAWYERS. They are operating above the law and let's not forget not ONE person has been charged or prosecuted for their part in the biggest white collar crime in history. This is moral hazard in action giving the burglars a fair chance to put the stolen property back on the merit system. Sure that will work. A $25 Billion settlement from the burglars that will go right back to the burglars.

Wake up!

SaintClarence27 wrote on February 20, 2013 at 9:02 am

I hope this is PennTeller satire. If not:

You do realize that the law students are the lawyers in a legal clinic - they aren't paid. No one has their "hand in the money bag." 

And ALL of the lawyers stand in solidarity with the Wall Street investment firms? You need to stop making things up and/or lying. You obviously have no concept of what Land of Lincoln, lawyers in general, law clinics and law students actually do.

Bulldogmojo wrote on February 20, 2013 at 10:02 am

I've been through this whole process and the system is setup to collect bundled properties so that the bundling insurance claims can go through. The so called settlements are designed with incentives to block people from keeping their homes. Matt Taibbi describes to Bill Moyers here how the scam works. Lawyers whether students or professionals work for the system itself not the actual foreclosure victims, the very system that has not handed out one prosecution of any player in the various scams. These payments made to foreclosure victims are just turned around and given back to the Banks who made the settlement from the stolen money in the first place. It rarely is enough on a case by case basis to move these people from their respective "Home Retention" programs back to the original mortgage status so once their "Settlement" paperwork is done they are right back to foreclosure status.

Read Matt Taibbi's article in Rolling Stone about Bank of America and how they ran and are continuing to run the scam. Lawyers are just paid or in your case unpaid spectators here. Whatever they use the $400,000+ for maybe coffee supplies. BTW how do you think law students are going to stand down entire law firms financed by those banks that blatently side step the law without being held to account for it? You should interview Judge Klause about his experience in handling stacks of foreclosures in his courtroom and the conduct of the lawyers involved over the last 5 years..

Federal program scrapped

 

SaintClarence27 wrote on February 20, 2013 at 11:02 am

Lawyers do not necessarily work for the system itself. You obviously have no idea what you're talking about. On one hand you claim that all lawyers and law students work for the same people, then ask how law students and public interest lawyers are going to face down the big law firms and banks. Which is it? Do all lawyers work for the same group, or are some not working for the same group, but unable to change the system?

Bulldogmojo wrote on February 20, 2013 at 12:02 pm

They have had 5 years to make hay against these banks. When are they going to make their big move? You think you are on a level playing field when in fact they won't even let you in the stadium where the playing field is. There is no shortage of people picking over the carcass of this situation, lawyers, real estate agents, loan originators, auditors and the list goes on. All of them squaters that have to be paid to leave the situation.  Lisa Madigan decides that she is going to repurpose some funds from the settlement like it's her own piggy bank, so a bunch of law students can play lawyer with real peoples lives. To pretend to take on a system that operates above the law. You are not going to have your Dershowitz moment with funds that were meant to get people back on their feet. That $400,000 could straighten out more than a few mortgages for people. 

Don't take my word for it you can watch this new frontline documentary "The Untouchables" and watch how lawyers are patroling the perimeters for the offenders from right inside our own justice department. You can tell me which lawyers are on whose side afterward but until then your profession can suffer its well deserved lumps.

SaintClarence27 wrote on February 20, 2013 at 12:02 pm

I'll have to watch later, but until then, I will tell you that it isn't my profession.

Also, your "law students can play lawyer with real peoples lives" comment is as disingenuous and wrong as it is insulting. The reality is that having legal help significantly decreases the chance of foreclosure. Law students can provide that help for free for the people who really need it. And law students, supervised by attorneys (apparently at Land of Lincoln for this clinic), are smart, capable, and do a good job. 

Bulldogmojo wrote on February 20, 2013 at 12:02 pm

and if they FAIL?

Free legal help is worth just that so if a person is against the ropes to no fault of their own then they get a substandard level of legal assistance. If this was on the up and up there would be no need for legal defence they would just reset the mortgages with proof of income.  Also that money is supposed to go to people who have long since lost their homes already due to a system that was unprepared for this foreclosure scam. No lawyers required, they just need to pay it out as the settlement dictated to the names on the list.

If you're not a lawyer you should be because you really jump to their defence.

SaintClarence27 wrote on February 20, 2013 at 1:02 pm

1) Why do you assume that they get substandard level of legal assistance? They don't. You're just assuming as much, which is really insulting to people who are trying to help others, aside from your lack of knowledge in this area. You do understand that all filings are reviewed by licensed attorneys? That law students work is by no means substandard? 

2) As for directly disbursing the funds, in 2009 there were 131,132 foreclosure filings in Illinois. Great. Each of them gets 3 bucks. Oh, that's JUST 2009. This is actually the most efficient way to spend the money.

Bulldogmojo wrote on February 20, 2013 at 2:02 pm

According to letters from Madigan's office those people are entitled to a minimum of $850.00 a piece depending on the circumstances aside from the now defunct Fed program that was supposed to pay settlements also. So yes its probably more lies from Madigan we could be in agreement there.

I don't care if these students/lawyers find me insulting. If they can't take the little bit of grief from me in my posts, how are they going to handle it when the other side says "objection your honor" folowed by the judge saying "sustained" time and time again? They better butch up fast because they chose to be in the offended business and their adversaries aren't paid huge sums of money to back off.

Experience matters. How many innocent people are sitting in prison or even on death row because they had an inexperienced public defender? Having enough money for experienced legal representation will unfairly tip the scales in your favor hence none of the high ranking people on wallstreet being brought to justice which was my original point.

The banking industry is an out of control starving wild animal that feeds on cash and our Government is complicit in feeding it so this is no longer about "The Law" and due process.

SaintClarence27 wrote on February 20, 2013 at 2:02 pm

I would posit that they can take it (law school is more stressful than this), but that doesn't mean that you're right. I'm just saying you're wrong. Saying that people should be able to handle it doesn't mean that you aren't wrong.

While experience *can* matter, it specifically matters in certain areas of the law. Not so much in foreclosure defense, which is primarily forms and standard pleadings. And even so, every case through a clinic is reviewed by a licensed attorney with quite a bit of experience in that area.

As for the public defender, while experience matters more (and your hypo does happen), the issue is generally not experience. It's resources. When you pay an attorney a huge retainer, he's JUST working on your case. Public Defenders never have that luxury. They're overworked and understaffed - which goes more towards my point than yours. Finally, the money issue in criminal law has a lot to do with hiring experts. Experts are insanely expensive. If the police department has a payrolled blood spatter analyst say one thing, it helps to have a blood spatter analyst of your own to dispute it. Same with autopsies. PDs don't get a second doctor to testify that the first doctor was incorrect. When a sherriff talks about bullet trajectories, it helps to have an expert to potentially counter what he says. Same with arson - look at the Cameron Todd Willingham case, for instance. In short, I agree that money makes a huge difference in criminal law, but not for the reasons you suggest.

I would agree with your final comment.

Bulldogmojo wrote on February 20, 2013 at 8:02 pm

If you agree with my last statement then why do you think the appropriate people to send into battle are a few college students with one lawyer looking over their shoulder?

Its like saying well we know you are just a private during war time but go ahead and leave basic training early and we will send a sargeant with you to hopefully fill in the gaps as you learn through trial and error in the field. Except the casualties will be someone's home and financial well-being they may have worked for decades to establish.

SaintClarence27 wrote on February 20, 2013 at 9:02 pm

Because the stacking of the deck occurs with the initial mortgage contract, NOT during the litigation itself. These aren't college students - they're professionals, many of whom have advanced degrees. They do fine with what opportunity is there. The pproblem is that the opportunity is  not there - like I said, the deck was stacked a long time previously.

Bulldogmojo wrote on February 20, 2013 at 11:02 pm

and like I said I've been through this entire process and saw what other people went through and I'm telling you its much more convoluted and sinister during every step of the process. It's not just about a poorly worded contract it's about the apparatus to derail the entire legal process to avoid prosecution and prevent people from remaining in the property.

Let me give you one example that even freaked me out. Matt Taibbi in his investigation of Bank of America revealed the following...

"As part of an $8.4 billion settlement it entered into with multiple states over predatory lending practices, the bank agreed to provide homeowners with modified loans and promised not to raise rates on borrowers. But no sooner was the deal signed than the bank "materially and almost immediately violated" the terms, according to Nevada Attorney General Catherine Cortez Masto. It not only jacked up rates on homeowners, it even instituted a policy punishing any bank employee who spent more than 10 minutes helping a victim get a loan modification."

Sorry but this isn't amateur hour. 


 

SaintClarence27 wrote on February 22, 2013 at 7:02 am

While it may seem really convoluted to you, it's really not to someone who deals with the system on a daily basis. That's why the law students who deal with LOTS of these will generally do as well as an attorney, as long as they're supervised to make sure things don't slip through the cracks. 

You don't surprise me a bit with the banking stuff - they wrote our bankruptcy laws.

rsp wrote on February 21, 2013 at 4:02 pm

I had a problem with my morgage and it went on for several months. I kept asking for a modification and was told I could only talk to one person who refused to talk to me. I had people call on my behalf and he refused to talk to them. Finally someone I knew who knew the president of the bank had a sit down. He told the idiot to work it out. My friend and I met with the idiot and the first thing he said was he didn't know I had equity in my house. All that time wasted was costing me money and he never looked at any paperwork to see what could be done. You know what he did all day in his office? He played video games online. He posted comments about bank customers he had to deal with on his website. Kept him busy.