Banks Committee

JOINT FAVORABLE REPORT

Bill No.:

HB-6351

Title:

AN ACT CONCERNING FORECLOSURE MEDIATION.

Vote Date:

3/15/2011

Vote Action:

Joint Favorable Substitute

PH Date:

3/1/2011

File No.:

SPONSORS OF BILL:

Banks Committee, Representative Bruce Morris 140th District

REASONS FOR BILL:

After the most recent foreclosure crisis there have been an increasing number of state residents who have been involved with a foreclosure. However as the process currently stands those who enter into mediation also find that they continue to receive paperwork from the foreclosure process while they are in mediation. This paperwork is often confusing and will notify them of impending court dates that they are not actually responsible for. In most cases these people are legally unrepresented and unable to fully differentiate between the mediation process and foreclosure process. This bill will regulate that those who choose to use mediation, will have mediation take place prior to the act of foreclosure.

SUBSTITUTE LANGUAGE:

Churches and non-profits were added to the mediation process. This will only apply to foreclosed buildings are specifically being used directly for church or non-profit related functions.

RESPONSE FROM ADMINISTRATION/AGENCY:

Howard F. Pitkin, Commissioner, State of Connecticut Department of Banking

“The Department of Banking is in opposition to HB 6351, AAC FORECLOSURE MEDIATION. The act removed the limitation that foreclosure mediation not be limited to thirty days. I would like to add that the agency is currently working with the Judicial Department and the mortgage industry to see how we can facilitate changed to the process to make it work better for all parties involved.”

NATURE AND SOURCES OF SUPPORT:

Joseph Taborsak, Representative, 109th Assembly District

“In sum, HB 6351 substantially improves the current status of the law which allowed foreclosures to continue during mediation. This predicament undermines the public policy of the Foreclosure Mediation Program and is unfair to Connecticut homeowners. Thank you for considering this legislation to address this problem and please support a joint favorable report of this fair measure going forward.”

Jeff Gentes, Connecticut Fair Housing Center

“Connecticut has benefited greatly from the Foreclosure Mediation Program you created in 2008: more than 5,000 homeowners who've completed mediation have been able to keep their homes… Connecticut's courts would benefit if we put mediation first. The program you created not only saves homes- it also makes litigation unnecessary, as about 78% of mediation cases settled. By passing HB 6351, and putting mediation first, we'd eliminate needless costs.”

Raphael L. Podosky, Legal Assistance Resource Center of Connecticut

“The borrower thus often find himself waiting for the lender to pull information together at the same time that the lender is threatening the homeowner with default for failure to plead. The bill says that, once mediation requested, pleading will stop until 15 days after mediation is completed. This makes much more sense as a way to maximize the parties' mutual ability to reach a successful conclusion.”

Keith K. Fuller, Attorney

“Foreclosure litigation often proves to be unnecessary, since more than 75% of the cases in mediation settle without continued litigation. House Bill 6351 would leverage the success of the mediation program and lower the costs to our courts of the status quo.”

NATURE AND SOURCES OF OPPOSITION:

Tom Mongellow and Fritz Conway, Connecticut Bankers Association

“This bill would create a moratorium on any motions or pleading associated with a foreclosure, while a borrower is enrolled in the Judicial Department's Foreclosure Mediation Program… There are several public policy concerns surrounding delays in the foreclosure process including, protection of the existing housing stock; anti-blight issues surrounding vacant or abandoned properties, depreciation of housing prices which prolong negative equity situations for existing homeowners and reduced home sales due to market uncertainty. There were carefully taking into consideration when the Mediation program was developed, resulting in the allowance of motions and pleading during the duration of the mediation.”

Reported by: Justin Rosen

Date: 03/18/11