State Senator Bob Duff
February 26, 2008
Duff, Barry: Mortgage Relief Proposal Addresses Short and Long-term Needs
Legislative leaders, attorney general express support for comprehensive plan
Left to right: Representative Ryan Barry, Senator Bob Duff, Attorney General Richard Blumenthal, Senate President Pro Tempore Donald Williams. (February 26, 2008)
Joined by legislative leaders and the state attorney general today, Senator Bob Duff (D-Norwalk) and Representative Ryan Barry (D-Manchester), co-chairs of the General Assembly's Select Committee on Banks, unveiled a comprehensive package of short and long-term reforms aimed at keeping subprime mortgage holders in their homes and preserving Connecticut's economy during a time when foreclosures are on the rise nationwide.
"This is as much about keeping our economy strong as it is about helping families to stay in their homes," said Senator Duff. "On an almost daily basis, we hear stories from across the country that illustrate the devastating effect that subprime mortgages are having on families, communities and the national economy. The steps that we'll take with this legislation will help prevent the mass foreclosures and homelessness that we've seen in other states from dragging down our state's economy and leaving our friends and neighbors on the streets."
"This is a bill we crafted based on what we've heard from constituents about the fragility of the market and what we've heard from housing advocates and industry professional, who say that our foreclosure problems are not going away any time soon," Representative Barry said. "We've given the Department of Banking Commissioner additional powers, including the ability to suspend foreclosures for six months. We've also created programs that have succeeded in other states, and we hope to have the same success in Connecticut. The assistance programs are not handouts. Participants will have to pay back their loans and will have liens placed on their homes. But we can reach thousands of homeowners who would otherwise fall through the cracks."
The comprehensive proposal includes:
- A multi-tiered mortgage assistance program, slated to begin accepting applications on October 1, 2008,
- Creation of an Emergency Mortgage Assistance Program Committee to govern the administration of the multi-tiered mortgage assistance program,
- New restrictions on mortgage brokers and lenders in Connecticut,
- Expanded responsibilities for the Commissioner of the Department of Banking, and
- Creation of a Mortgage Crisis Job Training Team through the state's CTWorks One Stop Career Centers.
"Thousands of families across Connecticut may lose their homes if we stand by and do nothing," said Senate President Pro Tempore Donald E. Williams, Jr. (D-Brooklyn). "This proposal will keep people in their homes, stabilize neighborhoods and establish anti-predatory rules that will help prevent a similar crisis from occurring in the future. I applaud the co-chairs for their hard work and look forward to enacting real reform this legislative session."
"Too many people have been caught in this mortgage crisis and are finding they cannot afford to keep up payments on their homes," Speaker of the House Jim Amann (D-Milford) said. "If the rate of foreclosures continues to escalate, thousands of families and our economy stand to suffer. This legislation is comprehensive, well thought out and most importantly targets those most in need."
"New Haven is one of the communities in Connecticut that is about to be hit hard by the mortgage crisis," Senate Majority Leader Martin M. Looney (D-New Haven) said. "The impact on families and the economy will be profound unless we take action. The creation of a revolving loan fund for mortgage relief is part of our Emergency Relief Plan for Connecticut Families precisely because of this urgent need."
Attorney General Richard Blumenthal supports these proposals, as well as creation of a separate, independent state agency to issue $100 million in bonding, which would be paid from mortgage revenue--without any use of taxpayer money for operating expenses or bond payments. The authority would sunset for issuing loans after two years--sufficient time to stabilize the market. Its existence would be limited to a maximum of 20 years while mortgages are repaid.
"Our federal government has boasted of offering a lifeline to homeowners in crisis, but it's more like a shoelace," said Attorney General Blumenthal. "With our entire economy on the brink of catastrophe, citizens need more effective aid to avoid foreclosure--and they need it now. These proposals would keep people in their homes, but impose accountability on them and lenders. This refinancing system, modeled after a successful depression-era program, could spare homeowners from devastation without any costs to taxpayers. This nationwide debt crisis is devastating citizens at every level, not simply irresponsible deadbeat delinquents, but families who have lost jobs, homeowners victimized by lies and deceit by unscrupulous brokers and lenders, and responsible homeowners who have suffered sudden unfortunate circumstances."
The proposal (House Bill 5577) will receive a public hearing on Thursday, February 28, in Room 2B of the Legislative Office Building in Hartford beginning at 11:00 a.m.
Download a two-page handout that outlines and summarizes the this proposal for responsible lending and economic security. (PDF)
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