Attorneys general, including Lisa Madigan of Illinois, and Obama administration officials have announced the largest state-federal settlement in history, giving limited relief to current and former homeowners who were either foreclosed on or are underwater. Current and former Illinois homeowners are expected to get $1 billion from the $25 billion nationwide mortgage fraud settlement.
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The money or credit will go to former borrowers who lost their homes between January 2008 and last year. They will be eligible for up to $2,000 each. Borrowers who are under water and unable to pay their loans now will be eligible for a re-evaluation of what they owe on their mortgages. Borrowers who are not delinquent but are underwater and unable to refinance because of this will be eligible for loan refinancing at lower interest rates. The agreement is between the states and five banks: Bank of America, JPMorgan Chase, Wells Fargo, Citibank and what was known as GMAC. Settlement deals with other lenders are still being negotiated. Madigan announced the settlement Thursday in Washington.