Connecticut House passes bill to expand, extend state's foreclosure mediation program for homeowners, including provisions that require parties to consider other options such as short sale, deed in lieu of foreclosure; measure heads to Senate
May 23, 2013
– Legislation Expands, Extends Program For Homeowners
Banks Committee Chairman William Tong (D-Stamford, Darien) led the House of Representatives Thursday in unanimously passing legislation that expands and extends the state’s foreclosure mediation program for homeowners.
“Many homeowners are still mired in difficult financial situations and need our assistance to make sure they are treated fairly,” said Rep. Tong, who summarized the bill before the House voted . “This legislation builds on efforts we initiated in previous years and offers new protections for distressed homeowners engaged in the mediation process.”
House Bill 6355, An Act Concerning Homeowner Protection Rights, strengthens and streamlines the mediation process by creating rules to reduce needless delays and endless requests for paperwork, Rep. Tong said. In addition, all parties must mediate in good faith or face sanctions, fines or dismissal of the foreclosure. The bill ensures that homeowners engaged in mediation will not simultaneously face foreclosure-related litigation. The bill also streamlines foreclosures on abandoned property in an effort to reduce blight.
“This new legislation expands on what has already become a national model for helping people with the foreclosure process,” Tong said. “We need to continue to look for new ways to help them cope with the burden and extra demands of litigation while they try to work out a compromise with the banks.”
Rep. Tong led passage of legislation in 2011 that made it easier for people to qualify for the Connecticut Housing Finance Authority’s Emergency Mortgage Assistance Program (EMAP). The program allows for EMAP recipients to file defenses, counterclaims or set-offs against foreclosure on the assisted mortgage and specifies that the calculation of the maximum 60 months of EMAP payments begins with the first payment.
Legislation that Tong also championed in 2011 for the first time gave homeowners facing foreclosure the opportunity to have court proceedings held in abeyance while they seek mediation.
“It’s been five years since the financial crisis of 2008, and the housing market has still not fully recovered,” Tong said. “Adding more protections for homeowners was one of the governor’s and Banks Committee’s top priorities this year. HB 6355, I believe, will require fair and reasonable negotiating practices in an effort to keep people in their homes.”
The legislation extends the mediation program to June 30, 2014, for foreclosure actions with return dates of July 1, 2008, through June 30, 2009. The program already runs until June 30, 2014, for foreclosure actions with return dates of July 1, 2009, through June 30, 2014.
The legislation also expands the scope of the program by requiring that it address the disposition of property through means other than foreclosure, including short sales and deeds in lieu of foreclosure. The bill adds a requirement that mediators be unbiased and prohibits them from giving legal advice to any party in mediation.
In addition, the bill identifies the “objectives of the mediation program” and requires parties to attend foreclosure mediation sessions having the “ability to mediate,” which means a general willingness and ability to participate in the mediation process.
The bill establishes a pre-mediation process, during which the mediator and the mortgagor must meet. A newly prescribed mediation information form must be used for foreclosure actions with certain return dates.