Settlement may spark help for homeowners

Suburban homeowners who are at high risk of foreclosure might find their bank more willing to work with them to restructure their mortgage so they can stay in their homes.

That is likely the aftereffect of Monday's groundbreaking settlement between Bank of America and 11 states, including Illinois. The states sued Countrywide, the nation's largest mortgage lender, for giving risky, high-cost loans to people without seeking proof that they could afford to pay them back. Countrywide, which has since been bought by Bank of America, is now required to restructure the debt of 21,000 Illinois residents who were victims of their loans.

Local bank officials interviewed Monday said they had limited dealings with subprime loans, but regardless, are stepping up efforts to help their customers.

Tom Kelly, of Chase Home Lending, said they've modified $6 billion worth of mortgages since last spring, and will continue to help various loan modification programs.

"We will review the Countrywide agreement ... and see if there are other tools in there that we should consider," Kelly said. "Our preference is to keep the family in the house whenever possible."

Harris Bank also is trying to be more cooperative with its customers who have found themselves in loans they can't afford.

"We work on a case-by-case basis with our customers who are in a tough position," said Harris spokeswoman Colleen Kroll.

In general, credit unions are faring better than large banks in this mortgage crisis because they didn't stretch the lending rules as much, said Ed Buettner, CEO of Arlington Heights-based Meadows Credit Union.

"You can't be putting people into loans they can't afford. It's not fair to them," Buettner said. "Things are going to be changing now - for the better."

Natalie Bauer, a spokeswoman for Illinois Attorney General Lisa Madigan, said the attorney general's office hopes other lending institutions modify their practices in the wake of the settlement.

"This settlement shows that it's possible for services to work with investors to come up with an aggressive loan modification program," Bauer said. "We're looking to other services to implement similar plans."