March 11, 2012

CONNECTICUT RECOMMITS TO HOUSING AID

By Rep. Larry B. Butler

Three important announcements earlier this year will give a much-needed boost to homeownership and the overall economy of Connecticut.

Gov. Dannel P. Malloy is recommending adding more than $330 million to bolster affordable and supportive housing across the state.

The funding builds on last year's commitment, which allocated more than $130 million, and brings the total commitment to nearly $500 million over the next 10 years.

This is a long-overdue commitment for the cities. As House Chairman of the Housing Committee, I am looking forward to helping communities become more vibrant places to work and live.

The new proposal builds upon the initiatives Gov. Malloy included in last year's budget, including an increase of $30 million in bonding for each of the next 10 years for public housing to bring deteriorated and vacant units back on line; an additional $20 million that will increase affordable housing options; an additional $12.5 million in capital funding to reinvigorate the state's elderly congregate housing; and an annualized $1.5 million for the Rental Assistance Program, which assists low-income families with securing affordable decent, safe and sanitary housing.

It is estimated that these housing initiatives included in the current two-year budget will create or retain more than 6,700 jobs.

Investing in housing where there already is infrastructure is smart policy and this advances an agenda for making affordable housing more available, especially since we have high housing costs. For the past 20 years, Connecticut has languished in its commitment to affordable housing — a critical area that is needed to help individuals and families find stability and employment.

As studies have shown, every dollar spent on affordable housing generates multiple times that amount in private economic activity. Housing is going to be a key component of getting Connecticut moving again.

Another important development that will help housing came when state Attorney General George C. Jepsen announced a landmark $25 billion joint federal-multistate settlement agreement with the nation's five largest mortgage servicers over foreclosure abuses and fraud, and unacceptable nationwide mortgage servicing practices.

Under the settlement, Connecticut homeowners and the state will receive more than $190 million. As important as the financial relief is, the settlement also requires the banks to change the way they service distressed loans, and holds the banks accountable for what have become familiar abuses. And for the first time, state attorneys general will have authority to monitor how federally regulated banks comply with the new servicing rules and to impose heavy penalties on those banks that fall short. The $190 million will be divided among homeowners and the state of Connecticut:

• Connecticut borrowers will receive an estimated $119 million in benefits from loan term modifications and other direct relief.
• The estimated 7,500 Connecticut borrowers who lost their home to foreclosure from Jan. 1, 2008 through Dec. 31, 2011 and suffered servicing abuse would qualify for an estimated $1,500 in cash payments to individual borrowers.
• The value of refinanced loans to Connecticut's underwater borrowers would be an estimated $36 million.
• The state will receive a direct payment estimated at $27 million to help pay for local foreclosure prevention programs, such as the Connecticut Department of Banking's foreclosure prevention hotline, HUD-approved housing counselors, the judicial branch's foreclosure mediation program, nonprofit legal aid groups that help homeowners facing foreclosure, and loan modification programs supported by the Connecticut Housing Finance Authority.

The settlement does not grant any immunity from criminal offenses and will not affect criminal prosecutions. The agreement does not prevent homeowners or investors from pursuing individual, institutional or class action civil cases against the five servicers. The pact also enables state attorneys general and federal agencies to investigate and pursue other aspects of the mortgage crisis, including securities cases.

The third announcement came from the U.S. Department of Housing and Urban Development (HUD), which awarded Connecticut a grant of nearly $21 million to build, repair, renovate and modernize public housing units.

This grant will build upon the initiatives begun last year to address long-standing needed capital improvements for housing in our state.

It will also improve economic development and job creation, especially in construction industry.

Rep. Larry B. Butler, a Democrat, is in his third term representing the 72nd District in Waterbury.