June 3, 2011
FORECLOSURE MEDIATION BILL APPROVED BY HOUSE
Housing Committee Chairman Larry B. Butler applauded the House of Representatives’ passage of legislation that offers homeowners facing foreclosure the opportunity to have court proceedings held in abeyance while they seek mediation. The bill also extends the states successful foreclosure mediation program by two years until July 2014.
The bill (HB 6351) gives homeowners an opportunity to participate in the foreclosure mediation program without simultaneously engaging in litigation for up to eight months. The bill also would extend the judicial branch’s mediation program to include owners of properties occupied by religious organizations. Under the current law, the program is restricted to owner-occupants of one- to four-unit residential properties. The bill also:
“For most homeowners, mediation is the first opportunity they have to meet face to face with a representative from their mortgage company,” said Rep. Butler. “I’m pleased the program will now be available to places of worship. This legislation enhances what is already a national model for helping people with foreclosure and not to burden them with the extra demands of litigation while they try to work it out with banks.”
In response to the national foreclosure crisis, the General Assembly took action in 2008 to protect and assist homeowners by establishing a Foreclosure Mediation Program that has since become a national model. The program, conducted through the judicial branch, assists lenders and homeowners in negotiating a mutually agreeable resolution of a mortgage foreclosure action through the mediation process. Since the program’s inception, over 9,000 cases have completed mediation and the program has achieved a 79% settlement rate. This bill further improves the program by simplifying the process and making mediation more productive for homeowners and lenders. The bill also provides greater protections to renters who live in foreclosed properties, enhances municipalities’ abilities to prevent blight of foreclosed properties, adopts the federal exemption for highly compensated employees from overtime requirements for mortgage loan originators, and strengthens the competitiveness of Connecticut’s chartered banks.
The current process can be difficult for many homeowners to understand because while they are actively engaged in the mediation process with the lender, the foreclosure litigation continues concurrently. Putting mediation first will allow the homeowners to focus on what they need to do to assure a successful mediation and save them the cost of banks’ attorneys’ fees and missed time from work. Connecticut’s courts will also benefit by saving time and costs from unnecessary litigation. The mediation program saves homes, and makes costly litigation unnecessary, a win-win for all parties involved.
Properties in foreclosure often suffer from neglect during the process, and it can be difficult to find a property manager or owner to perform necessary maintenance. This bill enhances municipalities’ abilities in finding property owners or managers of residential properties in foreclosure by requiring their registration with the municipality when the foreclosure process begins. The bill also expands the scope of the existing registration requirements and provides civil penalties for failure to register. These new provisions will help ensure neighborhood preservation during and after foreclosure and allow for the monitoring of buildings at risk of deterioration as a result of foreclosure activity.
“This bill was one of my highest priorities and certainly a priority for Connecticut residents facing foreclosure,” said Rep. Butler. “I’m proud it passed in the House.”
Connecticut’s residents who are behind in their mortgage or are facing foreclosure on their homes may call the Department of Banking’s Foreclosure Hotline at 1-877-472-8313 toll-free to receive advice and guidance regarding their mortgage problems and their foreclosure case status.