State Senator Bob Duff
May 7, 2008
Duff and Representative Barry Deliver Mortgage Relief, Economic Security Measure to Governor
Legislation receives final approval in Connecticut Senate
The state Senate today gave final action to a comprehensive measure crafted by Senator Bob Duff (D-Norwalk) and Representative Ryan Barry (D Manchester), co-chairs of the General Assembly's Banks Committee, which will help to bring relief to Connecticut families caught in the national subprime mortgage crisis, prevent predatory lending in the future and protect the state's fragile economy. The legislation now moves to Governor M. Jodi Rell for consideration.
"Connecticut has the tenth highest number of foreclosures on the books in the country," said Senator Duff. "New Haven is ranked 35 out of the 100 top metro-area foreclosure rates. The Bridgeport, Stamford and Norwalk metro area comes in at number 45, and Hartford is holding at number 51. We have two options: Sit back and wait for the federal government to find a solution or take the proactive steps necessary to protect our state's families and economy. Today, we chose the right option in passing this legislation, and I urge the governor to take quick action on this bill."
"We have an economic problem that we don't want to see become a socioeconomic problem," Representative Barry said. "This bill strikes just the right balance to provide hope to many families who are at the risk of losing their homes while providing a new regulatory scheme that will ensure that credit will be available to prospective homeowners. Put simply, we want kids to be able to grow up in homes under normal circumstances and we want lenders to be able to provide credit to people who desire to obtain it."
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 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.
- 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-was approved in a 36-to-0 vote in the Senate. The governor has previously indicated her support for the measure.
The 2008 regular legislative session adjourns tonight, May 7, at midnight.
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