AP NEWS

Connecticut lawmakers aim to forestall foreclosures anew

March 6, 2019

A Connecticut program could get a second life after keeping many families in their homes during the layoff toll of the Great Recession, with an eye on helping a new set of foreclosure victims.

The plan would aid homeowners hit with massive expenses as a result of substandard concrete poured into foundations now crumbling away.

The banking committee of the Connecticut General Assembly voted 10-5 Tuesday afternoon in favor of extending a foreclosure mediation mandate for another four years, with the program installed after the economic collapse of 2008 and 2009.

Under the law, mortgage lenders are required to participate in mediation proceedings overseen by the Connecticut Judicial Branch, with the goal of finding a middle ground to avoid bank seizures of homes and cases averaging about seven months.

The law is scheduled to expire at the end of June, with a bill to extend mediation to 2023 introduced this winter by the legislature’s banking committee, whose chairs Sen. Alex Bergstein (D-Greenwich, Stamford) and Rep. Ezequiel Santiago are new to their roles.

The bill still requires a vote by the full Connecticut General Assembly for any enactment. Speaking Tuesday during a banking committee meeting webcast on CT-N, Santiago indicated maintaining the program would require just under $2 million for the upcoming budget, with Gov. Ned Lamont not having allocated any funding to extend the program in his initial budget proposal last month.

As of January, Fairfield County had the highest foreclosure rate in Connecticut, according to RealtyTrac, with about one in every 1,440 homes classified as under preparatory proceedings, coming under bank ownership or on the auction block.

Foreclosures have hit both cities like Bridgeport and wealthy towns like Weston, which had the highest foreclosure rate in the county as of January at nearly triple the foreclosure rate of the wider county.

“There’s still a need — when you are talking about foreclosure, we’re talking about the biggest investment that these people have made in their lives,” Santiago said Tuesday during a banking committee meeting webcast on CT-N.

On Tuesday, five Republicans voted at committee on Tuesday to keep the June sunset intact, including Rep. Charlie Ferraro (R-Milford) and Rep. John Frey (R-Ridgefield).

Rep. Tom Delnicki (R-South Windsor) voted to extend the mediation program, on the rationale of providing a financial buttress to homeowners in eastern Connecticut where substandard concrete has led to crumbling foundations beneath their houses, creating massive repair bills that has siphoned off money for making mortgage payments and other living needs.

“Folks with crumbling foundations that I’ve spoken to never realized that they could use this tool to actually help them, if they found themselves in that predicament of being foreclosed upon,” Delnicki said Tuesday in Hartford. “After the extended period of time, if it doesn’t ... appear to be a benefit to help these new victims of foreclosure, then I certainly would be receptive to the consideration of ‘sunsetting’ it.”

In testimony last month to the banking committee, the chief administrative judge of the Connecticut Judicial System indicated lenders have reached settlements in 86 percent of mediation cases under the program, which numbered nearly 29,500 over just over 10 years through last October.

“I presided over the foreclosure docket in New Haven from 2008 to 2010, and I can tell you without equivocation that this program has been more successful than any one of us could have dared hope at the time,” said Judge James Abrams in his testimony to the committee.

Rep. Brian Lanoue (R-Griswold) said data from his district suggested that more than half of the homeowners in the program failed to keep up with negotiated repayment schedules, however, falling back into mediation or outright foreclosure at later dates.

And Rep. Bill Simanski cited previous testimony before the meeting that foreclosure mediation proceedings have extended in some cases as long as three years, preventing properties from being rehabilitated under new owners able to afford the improvements.

“The foreclosure mediation program was set up ... in response to a crisis,” Simanski said. “The biggest problem in blight remediation is the fact that the foreclosure remediation process takes too long. ... It served its purpose — we should live up to our promise and sunset it.”

Alex.Soule@scni.com; 203-842-2545; @casoulman