Bryan Cohen Apr. 26, 2013, 6:25pm

CHICAGO (Legal Newsline) -- Illinois Attorney General Lisa Madigan announced Thursday that she awarded $5 million in grants from the national foreclosure settlement to fund new mortgage foreclosure mediation programs in counties with significant needs.

The $5 million in grants will fund three regional projects to help start foreclosure mediation programs in multiple judicial circuits including the first, second, fifth, sixth, seventh, 16th, 17th, 19th, 20th and 21st.

The grants will fund both the creation and the implementation of the mediation programs.

The funding for the projects comes from the $25 billion national settlement with the nation's five largest bank mortgage servicers: Citibank, Wells Fargo, JP Morgan Chase, Bank of America and Ally Bank, formerly known as GMAC.

The settlement addressed allegations of fraudulent practices while servicing loans of struggling homeowners, such as widespread robo-signing of foreclosure documents.

"The goal of a foreclosure mediation program is to connect homeowners in crisis with legal assistance and housing counseling services so they can accurately assess their options and pursue the best plan," Madigan said in a statement. "Because mediation has been proven to give homeowners a greater chance to save their homes, these grant funds will help both families and communities that have been devastated by the foreclosure crisis."

Northern Illinois University Law School, non-profit organization Resolution Systems Institute, the University of Illinois College of Law and the Carbondale-based non-profit mediation program coordinator Dispute Resolution Institute will help the courts start the mediation programs.

The regional projects will recruit and train mediators, work with judges to develop rules for mediation program implementation, develop case coordination systems, work with housing counselors and legal aid attorneys to help participating homeowners, develop an online monitoring system for the input of data, and evaluate and report outcomes of the programs to determine ways to improve the programs.

The Thursday announcement is part of an ongoing plan to distribute the settlement funds to counteract the impact of foreclosures in Illinois.

Madigan has already distributed $20 million worth of settlement funds for legal aid services for renters and homeowners in distress and has solicited proposals for $70 million in settlement funding to be put toward community redevelopment and housing counseling projects.

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