New bill could improve accuracy and fairness of foreclosure process

The Illinois Attorney General’s office has drafted legislation that would make servicers pay close attention to proper procedure in both the loan modification process and the preparation of foreclosure documents. HB 6951, championed by Rep. Marlow Colvin, Rep. Mary Flowers, and Sen. Jacqueline Collins, would make sure that all foreclosures in Illinois are based on accurate and truthful information. It would also ensure that no homeowner is kicked out of his or her home before all options are thoroughly considered, and that all homeowners receive the information they need to hold servicers accountable for complying with the requirements of foreclosure programs.
 
Importantly, the legislation would require servicers to comply with the requirements of all relevant loan modification programs, including HAMP, before completing a foreclosure case. If the homeowner is deemed ineligible for all programs, the servicer must explain its reasoning. Homeowners have long complained about servicers’ opaque decision-making process for HAMP. When a servicer denies a homeowner’s request for a HAMP modification, the servicer is supposed to give a reason for denial, but sometimes this doesn’t happen. It is up to the servicer how much detail it provides beyond a short answer, such as “insufficient income” or “incomplete file.” It is difficult for homeowners and housing counselors to dispute decisions if they don’t know what factors influenced the servicer’s decision and whether those factors are accurate. HB 6951 would require servicers to provide much more detailed information on their decision-making process, including the inputs into the calculations that allow them to estimate the modification’s profitability, 36 months of a borrower’s payment history, a record of all communications with the borrower, and the reason the modification request was denied. This information would allow a homeowner and his or her lawyer to identify inaccurate information and argue that the servicer did not adequately assess his or her application. 
 
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