AN ACT CONCERNING THE EMERGENCY MORTGAGE ASSISTANCE PROGRAM.

This bill changes the process for determining eligibility for the Emergency Mortgage Assistance Program (EMAP) by (1) allowing the Connecticut Housing Finance Authority (CHFA) to determine what constitutes a significant reduction in a borrower's income and (2) expanding the circumstances that constitute a financial hardship beyond a borrower's control.

The bill allows borrowers to apply for the program before they receive notice of intent to foreclose if they are 60 days or more delinquent on their mortgage. Currently, borrowers apply when they receive information about the program with the lender's notice of intent to foreclose. The bill also allows CHFA to refer an applicant to a U. S. Department of Housing and Urban Development (HUD)-approved counseling agency as part of the application process. The bill also specifies the circumstances under which the lender may proceed with the foreclosure.

Finally, the bill expands eligibility for the CT FAMILIES refinancing program. Under current law, the program is just for homeowners with adjustable rate mortgages (ARMs). The bill specifies that it is for homeowners facing financial hardships affecting their ability to meet their monthly mortgage obligation, including but not limited to those with ARMs.

EFFECTIVE DATE: July 1, 2009, except for the provision allowing EMAP applications when a person is at least 60 days late on his or her mortgage, which is effective October 1, 2009, and the provision on CT FAMILIES, which is effective on passage.

Under current law, in order to be eligible for EMAP, a person must be experiencing “financial hardship due to circumstances beyond his or her control. ” The law defines this to include a significant reduction of at least 25% of aggregate family household income that reasonably cannot be or could not have been alleviated by the liquidation of assets by the borrower, including a reduction resulting from a number of specified situations. The term also includes a significant increase in the mortgage payment amount. The bill allows CHFA to generally determine what amount constitutes a significant reduction and eliminates reference to the 25% threshold and the liquidation of assets. It also includes in the definition a significant increase in other housing related costs, including the cost of heat or utilities.

By law, before foreclosing on certain mortgages, a lender has to provide a notice to the borrower informing him or her of the default and that they have 60 days in which to have a meeting with the lender or consumer credit counseling agency, and contact CHFA to get information about and apply for EMAP if the default is unable to be resolved. If the borrower fails to (1) meet with the lender or (2) act within the designated time period, or if the EMAP application is denied or is not timely filed, the foreclosure can continue without any further interruption. The bill specifies that this does not apply if the lender refuses to meet with the borrower. Additionally, the bill provides that nothing in the EMAP statutes prevents a person from applying or reapplying and being considered for EMAP if the person is referred to the program by the foreclosure mediation program.

Yea

Nay

(03/10/2009)