More information on the mortgage assistance legislation approved this year.

Here is some information, sent to legislators by the Connecticut Housing Finance Authority (CHFA), with some of the details of Public Act 08-176, "An Act Concerning Responsible Lending and Economic Security". I hope this information is helpful:

Summary of P.A. 08-176

“An Act Concerning Responsible Lending and Economic Security”

Emergency Mortgage Assistance Program (EMAP),

Homeowner’s Equity Recovery Opportunity (HERO) Loan Program,

Foreclosure Mediation and CT FAMLIES Program

P.A. 08 -176 “An Act Concerning Responsible Lending and Economic Security” takes effect on July 1, 2008 and includes several components relative to homeowners who are delinquent and/or facing foreclosure.

Emergency Mortgage Assistance Program (EMAP)
The Emergency Mortgage Assistance Program is available to provide emergency mortgage assistance payments to eligible homeowners. Funding in the amount of $64 million has been provided for EMAP and will be administered by Connecticut Housing Finance Authority (CHFA).

• All lenders are required by law to take specific actions prior to commencing a judgment of strict foreclosure or foreclosure by sale for one-to-four family, owner-occupied residential real property located in the State of Connecticut, including condominiums.
• Lenders who start a foreclosure process upon a borrower, are required to give written notice to the borrower by registered or certified mail indicating that the borrower has 60 days from the date of the notice to confer with the lender or have a face-to-face meeting with a consumer credit counseling agency to attempt to resolve the delinquency or default. (A list of CHFA-approved counseling agencies is attached for your reference.)
• In the notice, the lender must also inform the borrower that the EMAP Program is being administered by Connecticut Housing Finance Authority (CHFA). If the lender and borrower are unable to resolve the delinquency or default, the borrower will have 60 days from receipt of the written notice to obtain information and apply for the EMAP Program.
• EMAP is not available to borrowers who have FHA-insured loans.
• Homeowners may contact the CHFA Special Programs Call Center located at 999 West Street, Rocky Hill, CT 06067 via telephone 8:30 a.m. to 5:00 p.m. – local calls 860-571-3500 or toll free 877- 571-CHFA (2432) or via e-mail at EMAPinfo@chfa.org
  

WorkPlace, Inc., in conjunction with other regional workforce development boards, will establish a mortgage crisis job training program for eligible borrowers if they are at least 60 days delinquent on their mortgage, are referred by the CHFA lender or demonstrate an imminent need to increase earnings in order to avoid delinquency or foreclosure.

Homeowner’s Equity Recovery Opportunity (HERO) Loan Program

The purpose of the HERO Program is to permit CHFA to purchase eligible mortgages directly from lenders and place those borrowers on an affordable repayment plan. Funding in the amount of $30 million will be available for this program. There are several options currently being developed. Anyone with questions may contact the CHFA Special Programs Call Center located at 999 West Street, Rocky Hill, CT 06067 via telephone 8:30 a.m. to 5:00 p.m. – local calls 860-571-3500 or toll free 877- 571-CHFA (2432) or via e-mail at HEROinfo@chfa.org.

Foreclosure Mediation
All lenders are required by law to attach to the front of the complaint that is served on the borrower a copy of the “Notice to Homeowner: Availability of Foreclosure Mediation” form and a “Foreclosure Mediation Request” form. In the mediation process, EMAP, HERO and the CT FAMLIES Programs will also be discussed with the borrower as alternatives to saving the borrower’s home from foreclosure. Inquires regarding Foreclosure Mediation may be directed to Roberta Palmer, Superior Court Operations at (860) 363-2734 or via e-mail at: roberta.palmer@jud.ct.gov.

CT FAMLIES Program

CHFA continues to offer the Connecticut Fair Alternative Mortgage Lending Initiative and Education Services (CT FAMLIES) Program, a refinancing mortgage loan that is at a fixed rate for a term of 30 years. Eligible homeowners who have an Adjustable Rate Mortgage (ARM) or their current mortgage is no longer suitable for their financial situation may qualify for a CT FAMLIES Loan. Homeowners may contact the CHFA Special Programs Call Center located at 999 West Street, Rocky Hill, CT 06067 via telephone 8:30 a.m. to 5:00 p.m. – local calls 860-571-3500 or toll free 877- 571-CHFA (2432) or via e-mail at CTFAMLIES@chfa.org.

CONNECTICUT HOUSING FINANCE AUTHORITY

EMAP COUNSELOR LISTING

AGENCY INFORMATION

Co-opportunity, Inc. 20-28 Sargeant Street Hartford, CT 06105 (860)236-3617 (860)808-1757

Housing Education Resource Center 901 Wethersfield Avenue Hartford, CT 06114 (860) 296-4242 (860) 296-1317

Neighborhood Housing Services of New Britain 223 Broad Street New Britain, CT 06053 (860) 224-2433 (860) 225-6131

Urban League of Greater Hartford 140 Woodland Street Hartford, CT 06132 (860) 527-0147 (860) 293-2621

Mortgage crisis relief bill.

One of the most important things we approved at the State Capitol this year was sweeping legislation to address the mortgage crisis, help thousands of Connecticut families weather the economic crisis that is still unfolding and guard against abusive sub-prime mortgage practices.

In addition to placing a priority on helping families to avoid losing their homes, this legislation makes good economic sense. When the mortgage crisis sends large numbers of homes into foreclosure and abandonment, it means the quality of life of whole neighborhoods would be at risk. And the mortgage crisis, itself, hurting the economy and costing jobs.

Action is needed and both the federal and state level. And the State of Connecticut is taking action.

Here is a summary of the legislation prepared by the House Democrats office:

AN ACT CONCERNING RESPONSIBLE LENDING AND ECONOMIC SECURITY

With the number of foreclosures on the rise in Connecticut, the General Assembly has taken action to protect homeowner’s rights and keep families in their homes without having a chilling effect on responsible lending.

HB 5577 includes a comprehensive set of reforms that (1) will provide mediation and financial assistance to individuals and families whose homes are at risk of foreclosure, (2) reform the practices of lenders and mortgage brokers, and (3) make sure that nothing is done that will negatively impact the availability of lending for prospective homeowners.

This legislation represents a months-long collaboration between both chambers, both sides of the aisle, the Department of Banking, the banking industry and consumer advocates.

MORTGAGE PROGRAMS

HB 5577 establishes a $140 million multi-tiered mortgage assistance program. The bill specifically authorizes the Connecticut Housing Finance Authority (CHFA) to (1) continue the CT FAMILIES refinancing program and (2) implement mortgage refinancing and emergency mortgage assistance programs. These programs will be funded without requiring any new revenue. Eligibility requirements vary from program to program.

Low and moderate income borrowers may be eligible for the CT FAMILIES refinancing program if they took a sub-prime loan and are no longer able to make their monthly payments.

HERO loans are meant to address the situation where homeowners owe more on their homes than the house’s appraised value. CHFA will purchase mortgages directly from lenders and restructure the mortgage to the satisfaction of lenders and borrowers. Eligibility criteria include the ability to pay back the HERO loan and a proven effort to have made good on financial obligations in the past. Property taxes and insurance will be included in the borrower’s monthly payment amount.

Generally, homeowners may apply for EMAP (1) if they have fallen behind in mortgage payments because of hardships like unemployment, illness, and divorce and (2) if they are likely to be able to resume payments within years. EMAP requires participating homeowners to pay 5% of their income to CHFA. CHFA will make the full mortgage payment.

FORECLOSURE MEDIATION

By July 1, 008, the Judicial Branch must establish a foreclosure mediation program in each Judicial District. Two million dollars is appropriated to the Judicial Department from the State Banking Fund for FY 09.

The goal here is simple: identify homeowners whose homes are at risk and try to point them in the direction of appropriate community-based resources and/or governmental relief programs including, but not limited to, the programs in this legislation.

When the commissioner commences foreclosure proceedings, the lender must notify the borrower about the availability of the mediation program and must send the mortgagor a mediation request application.

The Judicial Branch believes that this program will be up and running by July 1, 2008.

MORTGAGE REGULATION

When lenders issue non-prime loans, the bill prohibits lenders from engaging in misleading, deceptive, or untruthful practices and imposes a duty of good faith on lenders and brokers. Lenders must now, among other things (1) reasonably believe that borrowers will be able to repay the loan; (2) refrain from making non-prime refinance loans unless the loan provides a tangible net benefit to the borrower; (3) collect monthly escrow for property taxes and homeowner’s insurance; and (4) disclose by letter the terms of the loan and provide notice of subsequent material changes for first mortgage (non-prime) loans.

Like lenders, mortgage brokers now cannot offer a non-prime home loan that refinances any mortgage unless the loan provides a tangible net benefit to the borrower. Brokers must also examine the level of credit worthiness of a borrower before securing a loan for that borrower.

HB 5577 establishes a private right of action for violations of the bill’s loan provisions. The borrower may sue in court within three years of the mortgage closing (1) for the greater of actual damages or $1,000 and (2) for attorney’s fees. For a six year period, the bill also allows the borrower to raise as a defense, in any foreclosure action, that the lender has violated provisions of the bill.

Finally, the commissioner may use his existing statutory powers to (1) seek a court order for injunctive relief, (2) seek restitution for the borrower, (3) impose a civil penalty of up to $100,000 per violation, or (4) issue a cease and desist order to punish those who violate provisions of this bill.

House Bill 5577 (Approved by both the House of Representatives and the Senate.)

Of course, it will be important for the legislature to monitor how all of the parts of this legislation are working to see if there are changes that are needed so make sure this it works well in helping people. But it is my hope that this legislation will help many Connecticut families keep their American dream of homeownership alive. And I hope it will help our state as a whole avoid, as much as possible, the full effects to of the deepening economic problems.