CHICAGO - The Federal Housing Finance Authority wants a fee attached to new mortgages sold in Illinois and three other states because it costs more to foreclose on those states' home mortgages. In a letter released this week to the media, Attorney General Lisa Madigan demanded that the FHFA not add the new penalty fee for Illinois home buyers.
What's all the ruckus about? Illinois' foreclosure rates are some of the nation's highest, and Illinois - a state with a legislature and Supreme Court bought and paid for by trial attorneys - is one of the few states in the nation wherein foreclosures must go through the court system. The FHFA wants to be compensated for the extra costs Illinois foreclosures bring with them.
Legal Newsline reports on an unexpected rift between AG Madigan and the Obama Administration:
The FHFA, which oversees Fannie Mae and Freddie Mac, claims that additional fees on borrowers who live in Illinois, Connecticut, Florida, New Jersey and New York are necessary because legal protections in the states supposedly result in higher costs to Fannie Mae and Freddie Mac during the foreclosure process. The FHFA’s proposal says that the higher fees on borrowers would be eliminated if state lawmakers would roll back the legal protections.
Madigan, however, contends that the FHFA’s proposal lacks evidence that shows that statutory consumer protections are the main factors of higher foreclosure costs for Fannie and Freddie. The proposal, she alleges, ignores widespread mortgage servicer misconduct during the foreclosure process, which is a known driver of higher foreclosure costs.
The proposal, Madigan said, is no more than a thinly disguised threat to compel the states to accept higher costs for borrowers in their states or dismantle important legal protections entirely.
“If FHFA’s proposal is adopted, Illinois homeowners will inevitably pay a steep price – through higher interest rates or diminished legal protections for borrowers,” Madigan said. “Either way, it’s a lose-lose situation for homeowners.”
What AG Madigan doesn't admit is that her father's Democratic Party is home to the litigation industry that feeds the foreclosure business with an anti-business, big taxes, high unemployment, unpaid pensions and deep debt state government.