Connecticut Seal

General Assembly

 

Raised Bill No. 5165

February Session, 2008

 

LCO No. 1470

 

*01470_______BA_*

Referred to Committee on Banks

 

Introduced by:

 

(BA)

 

AN ACT CONCERNING THE EMERGENCY MORTGAGE ASSISTANCE PROGRAM.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. Subdivision (4) of section 8-265cc of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2008):

(4) "Mortgagee" means the original lender under a mortgage, or its successors, [who agrees to participate in the program established pursuant to sections 8-265cc to 8-265kk, inclusive,] or an assignee of a mortgage. [who agrees to participate in the program;]

Sec. 2. Subdivision (7) of section 8-265cc of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2008):

(7) "Financial hardship due to circumstances beyond the mortgagor's control" means: [a] (A) A significant [curtailment] reduction of at least twenty-five per cent of aggregate family household income which reasonably cannot be or could not have been alleviated by the liquidation of assets by the mortgagor, [and is related to one or more of the following: (A) Unemployment] including, but not limited to, a reduction resulting from (i) unemployment or underemployment of one or more of the mortgagors; [(B)] (ii) a loss, reduction or delay in receipt of such federal, state or municipal benefits as Social Security, supplemental security income, public assistance and government pensions; [(C)] (iii) a loss, reduction or delay in receipt of such private benefits as pension, annuity or retirement benefits; [(D)] (iv) divorce or a loss of support payments; [(E)] (v) disability, illness or death of a mortgagor; [(F)] (vi) uninsured damage to the mortgaged property which affects liveability and necessitates costly repairs; or [(G)] (vii) expenses related to the disability, illness or death of a member of the mortgagor's family, but is not related to accumulation of installment debt incurred for recreational or nonessential items prior to the occurrence of the alleged circumstances beyond the mortgagor's control in an amount that would have caused the mortgagor's total debt service to exceed sixty per cent of aggregate family income at that time; or (B) a significant increase in the dollar amount of the periodic payments required by the mortgage.

Sec. 3. Subsection (b) of section 8-265dd of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2008):

(b) Notwithstanding any provision of the general statutes, [or any rule of law to the contrary,] on and after [the date a mortgagee agrees to participation in the program established pursuant to sections 8-265cc to 8-265kk, inclusive] October 1, 2008, no judgment of strict foreclosure nor any judgment ordering a foreclosure sale shall be entered in any action instituted by the mortgagee to foreclose a mortgage commenced on or after [such] said date, for the foreclosure of an eligible mortgage unless (1) notice to the mortgagor has been given by the mortgagee in accordance with section 8-265ee, as amended by this act, and the time for response has expired, and (2) a determination has been made on the mortgagor's application for emergency mortgage assistance payments in accordance with section 8-265ff, as amended by this act, or the applicable time periods set forth in [said] sections 8-265cc to 8-265kk, inclusive, as amended by this act, have expired, whichever is earlier. For purposes of this section and sections 8-265ee to 8-265kk, inclusive, as amended by this act, an "eligible mortgage" is a mortgage which satisfies the standards contained in subdivisions (1), (3), (8) and (10) to (13), inclusive, of subsection (d) of section 8-265ff, as amended by this act.

Sec. 4. Subsection (a) of section 8-265ee of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2008):

(a) On or after [the date a mortgagee files an agreement to participate in the program established pursuant to sections 8-265cc to 8-265kk, inclusive] October 1, 2008, the mortgagee who desires to foreclose upon a mortgage which satisfies the standards contained in subdivisions (1), (3), (10), (11) and (12) of subsection (d) of section 8-265ff, shall give notice to the mortgagor by registered, or certified mail, postage prepaid at the address of the property which is secured by the mortgage. No such mortgagee may commence a foreclosure of a mortgage prior to mailing such notice. Such notice shall advise the mortgagor of his delinquency or other default under the mortgage and shall state that the mortgagor has thirty days from the date of such notice in which to (1) have a face-to-face meeting or telephone conference with the mortgagee or a face-to-face meeting with a consumer credit counseling agency to attempt to resolve the delinquency or default by restructuring the loan payment schedule or otherwise, and (2) to contact the authority, at an address and phone number contained in the notice, to obtain information and apply for emergency mortgage assistance payments if the mortgagor and mortgagee are unable to resolve the delinquency or default.

Sec. 5. Subdivision (8) of subsection (d) of section 8-265ff of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2008):

(8) There is a reasonable prospect that the mortgagor, as determined by the authority, will be able to repay the emergency mortgage assistance within a reasonable amount of time under the terms of section 8-265hh, as amended by this act, including through a refinancing of the mortgage, and the authority finds that, except for the current delinquency, the mortgagor has had a favorable residential mortgage credit history for the previous [five] two years or period of ownership, whichever is less. For the purposes of this subdivision, if a mortgagor has been more than thirty days in arrears two or more times on a residential mortgage within the previous two years, the mortgagor shall be ineligible for emergency mortgage assistance payments unless the mortgagor can demonstrate that the prior delinquency was the result of financial hardship due to circumstances beyond the mortgagor's control. In making a determination under this subsection, the authority may consider information regarding the structure of the mortgage, its repayment schedule and any other relevant factors or criteria it deems appropriate.

Sec. 6. Subsection (d) of section 8-265hh of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2008):

(d) All moneys received by the authority from mortgagors for repayment of emergency mortgage assistance payments shall be paid to the authority, deposited in such funds or accounts as the authority may establish from time to time for such purpose and [paid by the authority to the State Treasurer and deposited into the General Fund] be used solely for the purposes of the program established pursuant to sections 8-265cc to 8-265kk, inclusive, as amended by this act.

Sec. 7. (Effective July 1, 2008) (a) For the purposes described in subsection (b) of this section, the State Bond Commission shall have the power, from time to time, to authorize the issuance of bonds of the state in one or more series and in principal amounts not exceeding in the aggregate five million dollars.

(b) The proceeds of the sale of said bonds, to the extent of the amount stated in subsection (a) of this section, shall be used by the Department of Economic and Community Development for the purpose of a grant-in-aid to the Connecticut Housing Finance Authority for the Emergency Mortgage Assistance Program set forth in sections 8-265cc to 8-265kk, inclusive, of the general statutes, as amended by this act.

(c) All provisions of section 3-20 of the general statutes, or the exercise of any right or power granted thereby, which are not inconsistent with the provisions of this section are hereby adopted and shall apply to all bonds authorized by the State Bond Commission pursuant to this section, and temporary notes in anticipation of the money to be derived from the sale of any such bonds so authorized may be issued in accordance with said section 3-20 and from time to time renewed. Such bonds shall mature at such time or times not exceeding twenty years from their respective dates as may be provided in or pursuant to the resolution or resolutions of the State Bond Commission authorizing such bonds. None of said bonds shall be authorized except upon a finding by the State Bond Commission that there has been filed with it a request for such authorization which is signed by or on behalf of the Secretary of the Office of Policy and Management and states such terms and conditions as said commission, in its discretion, may require. Said bonds issued pursuant to this section shall be general obligations of the state and the full faith and credit of the state of Connecticut are pledged for the payment of the principal of and interest on said bonds as the same become due, and accordingly and as part of the contract of the state with the holders of said bonds, appropriation of all amounts necessary for punctual payment of such principal and interest is hereby made, and the State Treasurer shall pay such principal and interest as the same become due.

Sec. 8. (Effective October 1, 2008) Section 8-265jj of the general statutes is repealed.

This act shall take effect as follows and shall amend the following sections:

Section 1

October 1, 2008

8-265cc(4)

Sec. 2

October 1, 2008

8-265cc(7)

Sec. 3

October 1, 2008

8-265dd(b)

Sec. 4

October 1, 2008

8-265ee(a)

Sec. 5

October 1, 2008

8-265ff(d)(8)

Sec. 6

October 1, 2008

8-265hh(d)

Sec. 7

July 1, 2008

New section

Sec. 8

October 1, 2008

Repealer section

Statement of Purpose:

To require banks to participate in the Emergency Mortgage Assistance Program; to expand the program to homeowners faced with resets or other increases in the mortgage interest rate; to require that moneys received for the repayment of emergency mortgage assistance payments be used solely for the purposes of said program; and to provide funding for said program in the amount of five million dollars.

[Proposed deletions are enclosed in brackets. Proposed additions are indicated by underline, except that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is not underlined.]