OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 (860) 240-0200

http: //www. cga. ct. gov/ofa

sSB-948

AN ACT CONCERNING IMPLEMENTATION OF THE S. A. F. E. MORTGAGE LICENSING ACT.

As Amended by Senate "A" (LCO 8529)

Senate Calendar No. : 205

OFA Fiscal Note

State Impact:

Agency Affected

Fund-Effect

FY 10 $

FY 11 $

Judicial Dept.

BF - Cost

6. 4 million

1. 6 million

Banking Dept.

BF - Cost

100,000

11,000

Note: BF=Banking Fund

Municipal Impact: None

Explanation

Sections 1 through 23 - The requirements of these sections can be achieved at a one-time cost to the Banking Fund of $100,000 for consulting and data conversion. An ongoing cost of $11,000 per year would occur for services provided by the Department of Information Technology.

Sections 27 through 33 expand eligibility requirements for the Connecticut Housing Finance Authority's (CHFA), a quasi-public agency, Emergency Mortgage Assistance Program (EMAP) and CT Families program. PA 08-176, “AAC Responsible Lending and Economic Security,” appropriated $14. 0 million from the Banking Fund to CHFA for EMAP, and specified that the CT Families program be undertaken with an initial amount of $40 million in CHFA bonds.

Any increase in the number of eligible applicants will result in additional expenditures of the existing program funding as provided by PA 08-176. As of 2/28/2009, CHFA approved 74 CT Families loans for a total of $14. 9 million. As of 3/12/2009, CHFA approved 18 EMAP loans that will provide a total of $11,270 in monthly assistance, totaling $135,240 for the next 12 months (homeowners must recertify each year). In addition to monthly assistance, EMAP pays mortgage arrearages to bring the homeowner's loan current. Twelve applicants will receive assistance totaling $140,354 to bring their loans current.

Sections 34 through 37 make the foreclosure mediation program established under PA 08-176 mandatory for any foreclosure action on residential real property with a return date between July 1, 2009 and June 30, 2010. This policy change would triple during that period the number of mediations conducted under current law, which makes such mediation contingent upon the filing of a request for mediation.

The bill does not alter the current law provision that closes the program to new participants on and after July 1, 2010. However, since the mediation deadline is 90 days after mediation begins, the cost of the bill would continue for three months into FY 11.

The annual, incremental cost of the bill's caseload increase is estimated to be $6. 4 million including salaries, fringe benefits and other expenses.

The bill provides that the cost of the program expansion shall be borne by the Banking Fund.

The fiscal impact of the bill would cease in FY 11, as indicated above, in accordance with the current law provision that effectively terminates the program on June 30, 2010.

Sections 24 through 26 and 38 through 43 make technical and conforming changes that have no fiscal impact.

Senate Amendment “A” strikes the bill and eliminates the associated fiscal impact. Instead, the amendment makes the changes and has the fiscal impacts indicated above.

The Out Years

The annualized $11,000 ongoing cost for data management services indicated in Section 1 would continue into the future subject to inflation; the costs indicated for Sections 34-37 would cease in FY 11 since the foreclosure mediation program affected by these sections expires in FY 10 under current law.

Sources: CHFA staff report to Mortgage & Board of Directors, 3/19/200; Judicial Department Foreclosure Mediation Program Statistics as of 12/31/2008 included in the PowerPoint slideshow presented at the Banks Committee's 2/2/09 Informational Forum held on Foreclosure Mediation.

The preceding Fiscal Impact statement is prepared for the benefit of the members of the General Assembly, solely for the purposes of information, summarization and explanation and does not represent the intent of the General Assembly or either chamber thereof for any purpose. In general, fiscal impacts are based upon a variety of informational sources, including the analyst's professional knowledge. Whenever applicable, agency data is consulted as part of the analysis, however final products do not necessarily reflect an assessment from any specific department.