Illinois Gov. Rod Blagojevich Thursday signed into law a bill designed to protect homeowners from mortgage fraud, media reports said.
The law, which takes effect in January, requires written details of services from mortgage bailout firms and gives homeowners more flexibility if they want to cancel an agreement, according to reports.
“It’s bad enough when homeowners are at risk of foreclosure,” Blagojevich told the Chicago Tribune. “But it’s a nightmare when the very same companies they hired to help them save their home end up cheating them out of their most valuable asset.”
Mortgage rescue fraud generally involves deals where an owner deeds a house to an investor for a year or some other period of time, supposedly allowing time for owners to get out of debt and purchase the home back with a new mortgage. All too often, though, the owners give up titles to their homes and never get them back.
Under the new law, if a homeowner gives up the title to a home under a buy-back agreement, the owner will be able to cancel the agreement up to five days after it was signed, reports said. Once the agreement is canceled, the owner will regain the title and any mortgage debt carried before the agreement, according to reports.
Rescue firms also must pay the homeowner at least 82 percent of the fair market value of the property if the homeowner is eventually unable to buy back a home under the law, reports said.
The governor also signed into law two other bills that further protect homeowners, reports said. One requires any deed or other property transfer to be notarized and the other instructs the Cook County recorder of deeds to notify homeowners if a quitclaim deed is filed that would transfer property without the knowledge of the owner, according to reports. Both laws take effect in January, reports said.