Connecticut Seal

General Assembly

 

Substitute Bill No. 360

    February Session, 2012

 

*_____SB00360JUD___050312____*

AN ACT IMPLEMENTING THE RECOMMENDATIONS OF THE CONNECTICUT HOUSING FINANCE AUTHORITY TASK FORCE.

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

Section 1. Subsection (b) of section 8-265dd of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(b) Notwithstanding any provision of the general statutes, or any rule of law to the contrary, on and after July 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 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 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)], (7) and (9) to (12) inclusive, of subsection (e) of section 8-265ff, as amended by this act.

Sec. 2. Section 8-265ee of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) On and after July 1, 2008, a mortgagee who desires to foreclose upon a mortgage which satisfies the standards contained in subdivisions (1), [(3), (10), (11) and (12)] (9), (10) and (11) of subsection (e) of section 8-265ff, as amended by this act, 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 sixty days from the date of such notice in which to (1) have a face-to-face meeting, telephone or other conference acceptable to the authority 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) 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.

(b) Except in cases in which the mortgagee refuses to meet with the mortgagor, if the mortgagor fails to meet with the mortgagee or comply with any of the time limitations specified in the notice as provided in subsection (a) of this section, or if the mortgagor's application is not filed by the date thirty days after the date of any default in payment under an agreement as provided in subsection (c) of this section or if the mortgagor's application for emergency mortgage assistance payments is not approved by the date thirty calendar days after the date of receipt of the mortgagor's application in accordance with the provisions of section 8-265ff, as amended by this act, the foreclosure of the mortgagor's mortgage may, at any time thereafter, except as provided in subsection (e) of this section, continue without any further restriction or requirement under the provisions of sections 8-265cc to 8-265kk, inclusive, as amended by this act, provided the mortgagee files an affidavit with the court stating the notice provisions of subsection (a) of this section have been complied with and that either the mortgagor failed to meet with the mortgagee or failed to comply with all of the time limitations specified in the notice as provided in subsection (a) of this section or that the mortgagor's application for emergency assistance payments was not approved by the date thirty calendar days after the date of receipt of the mortgagor's application, or that a determination of ineligibility was made.

(c) If, after a face-to-face meeting, telephone or other conference acceptable to the authority, as provided in subsection (a) of this section, the mortgagor and the mortgagee reach an agreement to resolve the delinquency or default and, because of financial hardship due to circumstances beyond the mortgagor's control, the mortgagor is unable to fulfill the obligations of the agreement, the mortgagor may apply to the authority for emergency mortgage assistance payments under sections 8-265cc to 8-265kk, inclusive, as amended by this act, by the date thirty days after the date of any default in payment under the agreement. The mortgagee shall not be required to send any additional notice to the mortgagor other than the notice required under subsection (a) of this section.

[(d) No person receiving financial relief under sections 8-265cc to 8-265kk, inclusive, may file a defense, counterclaim or set-off to any action for foreclosure of the mortgage for which such financial relief was provided.]

[(e)] (d) Nothing in sections 8-265cc to 8-265kk, inclusive, as amended by this act, shall prevent a mortgagor from exercising rights that may exist under the foreclosure mediation program and those rights may be exercised concurrently with the rights afforded under sections 8-265cc to 8-265kk, inclusive, as amended by this act, provided the exercise of rights under the foreclosure mediation program shall not cause a delay in the determination under subsection (e) of section 8-265ff, as amended by this act. Nothing in sections 8-265cc to 8-265kk, inclusive, as amended by this act, shall prevent a mortgagor from applying or reapplying and being considered for emergency mortgage assistance if such mortgagor is referred to the emergency mortgage assistance program by the foreclosure mediation program.

Sec. 3. Subsections (d) and (e) of section 8-265ff of the general statutes are repealed and the following is substituted in lieu thereof (Effective from passage):

(d) The mortgagor shall provide the authority with full disclosure of all assets and liabilities, whether singly or jointly held, and all household income regardless of source. For purposes of this subsection, both of the following are included as assets:

(1) The sum of the household's savings and checking accounts, market value of stocks, bonds and other securities, other capital investments, [pensions and retirement funds,] personal property and equity in real property including the subject mortgage property. Income derived from family assets shall be considered as income. Equity is the difference between the market value of the property and the total outstanding principal of any loans secured by the property and other liens.

(2) Lump-sum additions to family assets such as inheritances, capital gains, insurance payments included under health, accident, hazard or worker's compensation policies and settlements, verdicts or awards for personal or property losses or transfer of assets without consideration within one year of the time of application. Pending claims for such items must be identified by the homeowner as contingent assets.

(e) The authority shall make a determination of eligibility for emergency mortgage assistance payments by the date thirty calendar days after the date of receipt of the mortgagor's application. During said thirty-day period no judgment of strict foreclosure or any judgment ordering foreclosure by sale shall be entered in any action for the foreclosure of any mortgage any mortgagee holds on the mortgagor's real property. No emergency mortgage assistance payments may be provided unless the authority finds that:

(1) The real property securing the mortgage is a one-to-four family owner-occupied residence, including, but not limited to, a single family unit in a common interest community, is the principal residence of the mortgagor and is located in this state;

(2) Payments, including amounts [required to be paid into escrow or impound accounts as reserves] for taxes and insurance payments, including mortgage insurance, or for charges, assessments and fees associated with a condominium or common interest community, as such terms are defined in section 47-202, or any combination of such payments, whether or not such payments are made into escrow or impound accounts as reserves, owed by the mortgagor under any mortgage on such real property have been [contractually] delinquent and the mortgagee, taxing authority, or unit owners association has indicated to the mortgagor its intention to foreclose;

[(3) The mortgage is not insured by the Federal Housing Administration under Title II of the National Housing Act, 12 USC Section 1707 et seq.;]

[(4)] (3) The mortgagor is a resident of this state and is suffering financial hardship which renders the mortgagor unable to correct the delinquency or delinquencies within a reasonable time and make full mortgage payments. For the purposes of subdivision [(8)] (7) of this subsection, in order to determine whether the financial hardship is due to circumstances beyond the mortgagor's control, the authority may consider information regarding the mortgagor's employment, credit history and current and past household income, assets, total debt service, net worth, eligibility for other types of assistance and any other criteria or related factors it deems necessary and relevant;

[(5)] (4) There is a reasonable prospect that the mortgagor will be able to resume full mortgage payments on the original, modified or refinanced mortgage within sixty months after the beginning of the period in which emergency mortgage assistance payments are provided in accordance with a written plan formulated or approved by the authority and pay the mortgage in full in level monthly payments of principal and interest, subject only to payment changes as provided in the mortgage, by its maturity date;

[(6)] (5) The mortgagor has applied to the authority for emergency mortgage assistance payments on an application form prescribed by the authority which includes a financial statement disclosing all assets and liabilities of the mortgagor, whether singly or jointly held, and all household income regardless of source;

[(7)] (6) Based on the financial statement, the mortgagor has insufficient household income or net worth to correct the delinquency or delinquencies within a reasonable period of time and make full mortgage payments;

[(8)] (7) 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, 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 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 four or more times on a residential mortgage within the previous year, 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, the length of time the mortgagor has lived in his or her home, and any other relevant factors or criteria it deems appropriate;

[(9)] (8) The mortgagee is not otherwise prevented by law from foreclosing upon the mortgage;

[(10)] (9) The mortgagor has not mortgaged the real property for commercial or business purposes;

[(11)] (10) The mortgagor has not previously received emergency mortgage assistance payments from the authority, provided a mortgagor who has previously received such payments shall be eligible to reapply if the mortgagor has reinstated the mortgage and the mortgagor shall not have been delinquent for at least six consecutive months immediately following such reinstatement;

[(12)] (11) The mortgagor is not in default under the mortgage except for the monetary delinquency referred to in subdivision (2) of this subsection; and

[(13)] (12) The mortgagor meets such other procedural requirements as the authority may establish.

Sec. 4. Subsection (a) of section 8-265gg of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) If the authority approves a mortgagor for assistance under the provisions of section 8-265ff, as amended by this act, the authority shall make monthly emergency mortgage assistance payments directly to each mortgagee secured by the mortgagor's real property for a period not to exceed sixty months, either consecutively or nonconsecutively, except no such payments shall be made after sixty months have passed since the date of the initial payment. The total monthly payment made by the authority, to or on behalf of a mortgagor under subsection (c) of this section, shall be not more than twenty-eight per cent of one hundred forty per cent of annual area median income, as published by the United States Department of Housing and Urban Development, divided by twelve. Upon receipt of payment in full from a mortgagor of the monthly amount established under subsection (b) of this section, the authority shall pay to each mortgagee the full amount then due to the mortgagee pursuant to the terms of the mortgage without regard to any acceleration under the mortgage. Such payments shall include, but not be limited to, principal, interest, taxes, assessments and insurance premiums. The initial payment made by the authority to each mortgagee may be an amount which pays all arrearages and pays reasonable costs and reasonable attorney's fees incurred by the mortgagee in connection with foreclosure of the mortgage.

Sec. 5. (Effective July 1, 2012) (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 sixty 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 to the Connecticut Housing Finance Authority for the purposes of sections 8-265cc to 8-265kk, inclusive, of the general statutes.

(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. 6. (NEW) (Effective October 1, 2012) (a) A mortgagee, as defined in section 49-8a of the general statutes, shall include the form promulgated by the judicial branch, in accordance with subdivision (3) of subsection (c) of section 49-31l of the general statutes, concerning notice of community-based resources to parties involved in foreclosure mediation with any notice to a mortgagor, as defined in said section 49-8a, of an intent to accelerate the mortgage loan.

(b) A municipality shall include such form with any statements sent to a homeowner regarding an arrearage owed by the homeowner for public sewer or water services or for property taxes.

(c) The judicial branch shall provide such form to parties involved in foreclosure mediation to public libraries, religious organizations and community-based programs throughout this state to ensure that such form is readily available to mortgagors.

(d) Such form shall include the following:

(1) A reference to CHFA/HUD-Approved Housing Counselors in lieu of a reference to CHFA-Approved Housing Counselors;

(2) A column in the approved housing counselor chart that includes the counties in which each housing counselor serves; and

(3) A notification to mortgagors who are currently parties to a foreclosure action that they should contact the Department of Banking's foreclosure assistance hotline for assistance with time sensitive foreclosure concerns.

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

Section 1

from passage

8-265dd(b)

Sec. 2

from passage

8-265ee

Sec. 3

from passage

8-265ff(d) and (e)

Sec. 4

from passage

8-265gg(a)

Sec. 5

July 1, 2012

New section

Sec. 6

October 1, 2012

New section

BA

Joint Favorable Subst.-LCO

 

FIN

Joint Favorable

 

JUD

Joint Favorable