State Senator Bob Duff
May 5, 2008
Duff Applauds Action of House in Approving Mortgage Relief Measure; Will Bring Bill For a Vote in State Senate
Comprehensive legislation crafted by state Representative Ryan Barry (D-Manchester) and Senator Bob Duff (D-Norwalk), co-chairs of the General Assembly's Banks Committee, designed to bring relief to Connecticut residents caught in the national subprime mortgage crisis won its first approval in a bipartisan 124-to-24 vote in the state House of Representatives tonight.
"This legislation clamps down on the subprime lending industry to ensure that taxpayers don't pay an even greater price of lenders who engage in risky business practices and float bad loans," said Senator Duff. "This is not a handout. This is a hand up. Connecticut is currently ranked Number 10 in foreclosures nationwide. This is a way to actively protect our state's economy and keep people in their homes."
"Connecticut families caught in this riptide of the subprime mortgage crisis find themselves being pulled into deeper and deeper water, and Connecticut's economy is in danger of joining them," Representative Barry said. "This legislation addresses the crises facing families and includes critical reforms for the industry. It is a comprehensive solution."
"This bipartisan bill puts the families of Connecticut first," said Governor M. Jodi Rell, who indicated her support of the legislation. "The massive surge in subprime lending of a few years ago has created an untenable situation for too many families in too many communities. Especially in the current uncertain economy, we need to do all we can to stabilize the real estate market and help families hang onto the homes they have fought so hard to keep. The bill will help families get on the right financial track, maintain the value of Connecticut's housing stock and ensure that future lending practices do not lead us into further difficulties."
The legislation creates several programs and makes a number of changes to state banking law. Specifically, it:
- Establishes the Homeowner's Equity Recovery Opportunity Loan (HERO) program through the Connecticut Housing Finance Authority (CHFA). It authorizes CHFA to use $30 million in existing bonds to purchase mortgages directly from lenders and place eligible borrowers on an affordable payment schedule for a 30-year fixed-rate mortgage. To qualify for HERO assistance, borrowers must have made an effort to meet financial obligations, have a sufficient and stable income, have the legal title to the mortgaged property and reside in it as their permanent residence, show an accounting for their cash flow and agree to attend in-person financial counseling at a CHFA-approved agency.
- Reinvests $14 million in the state's emergency mortgage assistance program (EMAP) for borrowers facing foreclosure
- Continuation of the $40 million CT FAMILIES assistance program
- Empowers CHFA develop a program to purchase foreclosed residential property for the purpose of providing affordable and supportive housing.
- Increases the statutory limit on uninsured mortgages that CHFA can hold from $1 billion to $1.5 billion.
- Creates a foreclosure mediation program within the state Judicial Branch.
- Establishes a mortgage crisis job training program at Workplace Inc., in association with other regional workforce development boards and one-stop centers.
- Defines "nonprime loans" and imposes new restrictions and licensing requirements on mortgage lenders and brokers.
- Gives the commissioner of the state Department of Banking additional responsibilities
- Allows the commissioner to participate in the Nationwide Mortgage Licensing System.
The measure--House Bill 5577--now moves to the state Senate for consideration.
The 2008 regular legislative session adjourns on Wednesday, May 7.
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