CHICAGO - Last February, the State of Illinois was awarded $20 million of a $25 billion multi-state, class action mortgage foreclosure settlement involving Citibank, Bank of America, Wells Fargo, JPMorgan Chase, and Ally Bank.
The logical assumption would be that the $20 million received by Illinois would go directly to those homeowners who had been the victims of the "robo-signing" abuse engaged in by the banks, resulting in foreclosure of their homes.
But this is Illinois, and such assumptions are foolish. Thus the "former" homeowners of Illinois were likely disappointed last Friday when Attorney General Lisa Madigan announced that she was awarding $4.5 million of Illinois' part of the settlement to a favored and politically-connected legal aid organization called Land of Lincoln Legal Assistance Foundation.
Land of Lincoln Legal Assistance Foundation proposed the money be distributed thusly:
Land of Lincoln has four offices in Illinois southern region - in East St. Louis, Alton, Champaign and Carbondale. The group's president is M. Ann Hatch of Belleville, and the board of directors is made up of influential and politically-connected attorneys, several from major downstate law firms. For example:
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President Hatch has donated to her Belleville area's 8th Ward Regular Democrats.
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Board member Greg Shevlin has given 92 campaign donations over the years to Democrats listed with the Illinois State Board of Elections, totaling over $76,000. To be fair, he did write one $200 check to Republican candidate for the Illinois Supreme Court, Bob Thomas.
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Ted Gianaris of the personal injury law firm, Simmons LLC, has given over $46,000 to numerous Democratic candidates, including State Senator Bill Haine, also an attorney.
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Board member Claire Manning has given over $7,000 to candidates over the years.
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Keith Casteal, of Samuels, Miller, Schroeder, Jackson and Sly, LLP, has also donated to candidates.
Not surprisingly, AG Lisa Madigan's office said that political contributions from the Land of Lincoln's board members was not a factor in determining to whom the $4.5 million grant would be given.
How will Land of Lincoln be accountable to the state for its activities?
Land of Lincoln offered accountability in their proposal (good luck understanding it):
"Using our case management system, we are able to track extensive information about our cases and outcomes, We will look at the overall number of clients served, by type of legal problem and level of service provided. For clients who receive services beyond advice, we track the specific outcome or outcomes based on the individual's legal problem, such as if a client was able to avoid foreclosure through loan modification, a forbearance agreement, or a short sale; whether we were able to resolve the client's tax or title problem; or whether the contract for deed buyer's rights were enforced. The three LSC-funded programs will use a standard list of outcomes which is currently being developed. The Executive Directors of the three LSC programs will confer at least quarterly by conference call to review the progress of implementation of the Program.
The programs will submit a quarterly report to the Attomey General using the attached proposed report forms. Quarterly reports will be submitted thirty days after the end of each quarter (October 30, January 30, April 30, and July 30)."
Resources provided by the Attorney General's office and the Land of Lincoln Legal Assistance Foundation:
- Download Request for Proposals Civil Legal Aid and Mortgage Foreclosure Projects
- Download Land of Lincoln grant proposal
- Download Land of Lincoln Grant Agreement
- Download LLOLFCurrent Board Members
CLARIFICATION: Illinois Review received a clarification from Attorney General Lisa Madigan's press secretary Natalie Bauer after publication, on 8.29.2012:
To start, there are two separate means of relief coming to Illinois. First, homeowners will receive DIRECT assistance from the banks in the form of principal reductions and refinancing for underwater loans. That sum is anticipated to amount to $1 billion that will go DIRECTLY to consumers. The independent monitor overseeing bank compliance with the settlement just issued his first progress report today, showing that over 5,000 homeowners in Illinois have already received some form of direct relief as the settlement implementation is underway.
The second form of relief is the money that the banks will pay to the state itself in settling these claims. That amounts to about $100 million (not $20 million as you noted) that the state then will distribute to initiatives that will help counteract the effects of the housing/foreclosure crisis throughout the state. See the paragraph from the press release issued in February (attached in full) when the settlement was announced for the distinction:
In addition to direct relief to borrowers in Illinois, the Attorney General’s office will recover money from the banks to remediate the effects of historic levels of foreclosures on homeowners and communities, including funding for legal aid services, housing counseling, outreach to borrowers, housing policy development and community revitalization.
The $20 million figure you cited in your posts pertains to the amount of the settlement funds going to the state that will be distributed to legal aid organizations. See the release announcing that commitment here. The grants recently announced for Land of Lincoln and LAF are part of that $20 million commitment to legal aid organizations, not the full sum of relief that Illinois will receive, whether through funds to the state or through direct relief to Illinois consumers.
