Quick Hit Brandon Campbell Monday March 26th, 2012, 4:16pm

Community Leaders Urge Madigan To Fight For Mortgage Debt Relief (VIDEO)

Chicago-area religious and community leaders are urging Illinois Attorney General Lisa Madigan to help provide financial relief for Illinois homeowners affected by the 2008 housing crisis.

Connie Gates-Brown, an Illinois resident who was negatively affected by the financial crisis, said she and her husband both lost their government jobs after budget cuts and can now barely make the mortgage payments on their condo.

“Time and time again, when we tried to modify our loan with Chase bank … After all the money we had given them over the years, they refused to negotiate with or even hear from us and now time is running out,” said Gates-Brown, a resident of Chicago’s Rogers Park neighborhood.

Gates-Brown spoke on Friday to a group of about 100 people, including students and members of community groups like Southsiders Organized for Unity and Liberation, Northside P.O.W.E.R., the Northwest Indiana Federation and IIRON, who assembled at North Park University’s Anderson Chapel for a rally where shouts of “Amen” easily found their place next to chants of “We are the 99 percent.”

The group of community activists said in a press release that they want Madigan to “pursue mortgage principle reduction, and to call for a moratorium on all foreclosures, particularly those instigated by Fannie Mae and Freddie Mac.”

“We ask Illinois Attorney General Lisa Madigan to use her position as a leader of the new national Mortgage-Backed Securities Working Group to stand with her constituents and stand up to financial institutions and to be a champion and save our homes,” said Marilyn Pagan-Banks, a leader with Northside P.O.W.E.R.

Here's more from the meeting and rally:

Working alongside U.S. Attorney General Eric Holder and about 50 additional attorneys and analysts, Madigan joined the Working Group, which was created in January, to help investigate the cause of the recent financial crisis.

President Barack Obama told the Los Angeles Times in January that the Working Group would “hold accountable those who broke the law” and “speed assistance to homeowners.”

In what’s being viewed as a positive step forward by the group of community leaders who gathered Friday, Madigan has begun pressuring Edward J. DeMarco, director of the Federal Housing Finance Agency, which oversees Fannie and Freddie, to consider debt forgiveness.

On Friday, Madigan joined about 100 Democratic legislators who sent letters to DeMarco in which she said “Principal reductions for borrowers can prevent the likelihood of defaulting and in turn, prevent unnecessary foreclosures. This is a critical step to repair the widespread destruction caused by the housing market's crash that has reverberated in communities across Illinois."

Meanwhile, DeMarco told NPR in a prepared statement that the FHA has no plans to consider principal reductions, in which the government would subsidize some of the cost of an underwater mortgage.

While not as drastic as California, which claimed the top spot with 155,000 foreclosures, last year Illinois foreclosed on about 21,000 homes. The Prairie State also has the third-highest foreclosure rate in the country, according to CoreLogic, a financial and property information service provider.

Madigan is expected to meet with the group of community leaders in April, but no specific date has been set.

Comments

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"Principal Reduction"?

It's unfortunate when you lose your job and still have to make house payments, but I don't think anyone is entitled to have the principal reduced on money they borrowed and promised to repay.

If your bank when re-do the loan, then go to another bank that will. Or just sell the house, take your loss, and move on.

I don't think the taxpayers should need to pay for this.

Bob Kastigar
IBEW Local 1220, Chicago

@Bob K

Nobody is asking taxpayers to pay for principal reduction. It's the banks and Wall Street --you know, the ones who wrecked our economy and made your home worth about half as much as it was before-- who should pay for the damage they've done.

As a union guy, you should know better than to side with the 1%.

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