SPRINGFIELD – Mortgage lenders in Illinois will have to prove to judges that they’ve offered underwater homeowners a variety of options – including modifications to their loans – before foreclosing, the state Supreme Court said Friday.
The court issued a new set of foreclosure rules formulated by a committee that began work nearly two years ago when lending institutions were being scrutinized for what some regulators said were questionable practices that fueled the nation’s financial crisis….
The rules set new procedures for notifying homeowners about the foreclosure they are facing. Lenders must send a specific notice of the sale date to individual homeowners, instead of just advertising it in newspapers.
The new rules include various measures that circuit courts should consider when trying to implement a foreclosure mediation program for borrowers. A provision dictates that in foreclosure cases where a defendant is living at the property, the borrower must have access to housing counseling approved by the federal government and free legal representation.
The state’s Supreme Court would have to authorize the mediation program of each circuit court. In written comments on the new rules, however, the committee recognized that not all lower courts have the money to establish a mediation program. Therefore, courts interested in such programs will have to explain to the highest court how they will pay for it.
Committee members also attempted to eliminate the “robo-signing” practice of major lending companies. The group established that lender representatives must provide a certified affidavit that at a minimum shows the amount of the loan default and the computer program the lender uses to automatically record and track mortgage payments.
This affidavit also must include the names of all lenders that have owned the mortgage in question.