Connecticut Seal

General Assembly

 

Substitute Bill No. 5567

    February Session, 2016

 

*_____HB05567JUD___041816____*

AN ACT CONCERNING ALTERNATIVES TO FORECLOSURES, THE FORECLOSURE MEDIATION PROGRAM, AND THE MORTGAGOR IN GOOD STANDING STATUTES.

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

Section 1. (NEW) (Effective from passage) For purposes of this section and sections 2 to 6, inclusive, of this act:

(1) "Mortgage" has the same meaning as provided in section 49-24a of the general statutes, as amended by this act;

(2) "Mortgagee" has the same meaning as provided in section 49-24a of the general statutes, as amended by this act;

(3) "Mortgagor" has the same meaning as provided in section 49-24a of the general statutes, as amended by this act;

(4) "Residential real property" has the same meaning as provided in section 49-24a of the general statutes, as amended by this act;

(5) "Senior lien" means the first security interest placed upon a property to secure payment of a debt or performance of an obligation before one or more junior liens;

(6) "Junior lien" means a security interest placed upon a property to secure payment of a debt or performance of an obligation after a senior lien is placed on such property, but shall not include a mechanic's lien, as defined in section 49-33 of the general statutes;

(7) "Lienholder" means a person who holds a security interest in real property; and

(8) "Underwater mortgage" means a mortgage where the debt associated with such mortgage, along with any senior lien, exceeds the fair market value of the mortgaged property as determined by a court in accordance with sections 4 and 5 of this act.

Sec. 2. (NEW) (Effective from passage) Notwithstanding any provision of the general statutes, any underwater mortgage on residential real property may be modified, and the principal balance increased by the amount of accrued interest, fees and costs allowed by law, without the consent of the holders of junior liens and without loss of priority for the full amount of the modified mortgage, provided such modification is approved by the court through entry of a judgment of loss mitigation under sections 4 and 5 of this act.

Sec. 3. (NEW) (Effective from passage) A mortgagor of an underwater mortgage may elect to transfer the residential real property encumbered by the mortgage to a mortgagee in satisfaction of the mortgagor's obligation to the mortgagee by agreeing to transfer such property in a record executed by both parties. The transfer agreement shall: (1) Transfer to the mortgagee all interests in the property, except the interests reserved to the mortgagor in the transfer agreement or the interests held by more senior mortgagees or lienholders; (2) discharge the mortgage; and (3) contemplate the termination of any other interest in the property subordinate to that of the lienholder party to the transfer agreement following a court's entry of a judgment of loss mitigation under sections 4 and 5 of this act.

Sec. 4. (NEW) (Effective from passage) A mortgagee or mortgagor may file a motion for judgment of loss mitigation in a pending foreclosure action following a modification under section 2 of this act or execution of a transfer agreement under section 3 of this act. Upon motion of the mortgagee or mortgagor and with the consent of the counterparty, the court, after notice and hearing, may render a judgment of loss mitigation approving the modification or transfer. Such judgment shall be a final judgment for purposes of appeal. The only issues at such hearing shall be (1) a finding of the fair market value of the residential real property encumbered by the mortgage, which may be determined by an appraisal conducted by a court-appointed disinterested real estate appraiser, (2) a finding of the fair market value of any priority liens on such property, (3) the mortgagor's debt, (4) whether the mortgage is an underwater mortgage, and (5) whether the modification or transfer was agreed to in good faith and for the purpose of mitigating the loss the mortgagor and mortgagee would incur through a judgment of foreclosure. If the court renders a judgment of loss mitigation, immediately after the expiration of any applicable appeal period or after the disposition of an appeal that affirms the judgment, then either (A) the mortgage held by the mortgagee shall be increased as contemplated in such judgment and any junior lienholder's lien shall be deemed subordinated to such mortgage, in the same order as existed prior to the subordination, or (B) the transfer contemplated in the transfer agreement shall be effectuated. The mortgagor and mortgagee shall, thirty days after the modification or transfer, submit the judgment of loss mitigation to the town clerk for recording in accordance with title 7 of the general statutes.

Sec. 5. (NEW) (Effective from passage) If the court does not enter a judgment of loss mitigation, then the modification or transfer contemplated by the mortgagor and mortgagee under section 2 or 3 of this act shall not be consummated. In the event of such nonentry:

(1) The mortgagor may, if eligible, petition for inclusion in the foreclosure mediation program established pursuant to section 49-31m of the general statutes, provided the mortgagor did not substantially contribute to the events leading to such denial or circumstances. In determining whether to grant such petition the court shall give consideration to any testimony or affidavits the parties may submit in support of or in opposition to such petition. The court may grant such petition upon a determination that (A) such petition is not motivated primarily by a desire to delay entry of a judgment of foreclosure, and (B) it is highly probable the parties will reach an agreement through mediation; and

(2) The mortgagee shall have the right to request the entry of a judgment of foreclosure in accordance with the other provisions of law, including the provisions governing strict foreclosure.

Sec. 6. (NEW) (Effective from passage) Nothing in sections 2 to 5, inclusive, of this act shall be construed as eliminating the debt or any judgment associated with an affected junior lien on the residential real property encumbered by the underwater mortgage.

Sec. 7. Subsection (a) of section 49-24b of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) On and after January 1, 2015, a mortgagee who desires to foreclose upon a mortgage encumbering residential real property of a mortgagor shall give notice to the mortgagor by registered or certified mail, postage prepaid, at the address of the residential real property that is secured by such mortgage, in accordance with the relevant notice provisions of this chapter and chapter 134. No such mortgagee may commence a foreclosure of a mortgage prior to mailing such notice. Such notice shall advise the mortgagor of his or her delinquency or other default under the mortgage and that the mortgagor has the option to contact the mortgagee to discuss whether the property may, by mutual consent of the mortgagee and mortgagor, be marketed for sale pursuant to a listing agreement established in accordance with section 49-24d. Such notice shall also advise the mortgagor (1) of the mailing address, telephone number, facsimile number and electronic mail address that should be used to contact the mortgagee; (2) of a date not less than sixty days after the date of such notice by which the mortgagor must initiate such contact, with contemporaneous confirmation in writing of the election to pursue such option sent to the designated mailing address or electronic mail address of the mortgagee; (3) that the mortgagor should contact a real estate agent licensed under chapter 392 to discuss the feasibility of listing the property for sale pursuant to the foreclosure by market sale process; (4) that, if the mortgagor and mortgagee both agree to proceed with further discussions concerning an acceptable listing agreement, the mortgagor must first permit an appraisal to be obtained in accordance with section 49-24c for purposes of verifying eligibility for foreclosure by market sale; (5) that the appraisal will require both an interior and exterior inspection of the property; (6) that the terms and conditions of the listing agreement, including the duration and listing price, must be acceptable to both the mortgagee and mortgagor; (7) that the terms and conditions of any offer to purchase, including the purchase price and any contingencies, must be acceptable to both the mortgagor and mortgagee; (8) that if an acceptable offer is received, the mortgagor will sign an agreement to sell the property through a foreclosure by market sale; and (9) in bold print and at least ten-point font, that if the mortgagor consents to a foreclosure by market sale, the mortgagor will not be eligible for foreclosure mediation in any type of foreclosure action that is commenced following the giving of such consent. The notice provided under this subsection may be combined with and delivered at the same time as any other notice required by subsection (a) of section 8-265ee or federal law. Should the mortgagor and mortgagee, by their mutual consent, choose to enter into discussions at any point subsequent to the commencement of a foreclosure action regarding the possibility of marketing the property pursuant to a listing agreement established in accordance with section 49-24d, nothing in this section, sections 1 to 6, inclusive, of this act or section 49-24e, as amended by this act, shall be construed as prohibiting the parties from entering into the listing agreement.

Sec. 8. Subsections (a) and (b) of section 49-24e of the general statutes are repealed and the following is substituted in lieu thereof (Effective from passage):

(a) If a mortgagor executes a listing agreement that is acceptable to both the mortgagee and mortgagor pursuant to section 49-24d and receives an offer to purchase the residential real property that encompasses a price, terms and conditions that are acceptable to both the mortgagor and the mortgagee, the mortgagor shall execute a contract for sale with the purchaser that shall reflect the agreed-upon price, terms and conditions and be contingent upon the completion of the foreclosure by market sale in accordance with sections 49-24 to 49-24g, inclusive, as amended by this act, and sections 49-26 to 49-28, inclusive. [, and 49-31t.] If an offer is received, but is unacceptable to the mortgagee, the mortgagee shall provide the mortgagor with written notice of its decision and, without limiting the breadth of its discretion, a general explanation of the reason or reasons for such decision. Such notice shall not be required in instances where the offer is unacceptable to the mortgagor. The mortgagor shall, not later than five days after the date of the execution of the purchase and sale contract, provide the mortgagee with a copy of such contract along with written documentation, in a form and substance acceptable to the mortgagee, evidencing the mortgagor's consent to the filing of a motion for judgment of foreclosure by market sale.

(b) Unless otherwise prohibited by applicable law, not later than thirty days after the receipt of such contract and the documentation evidencing consent, or not later than thirty days after the satisfaction or expiration of any contingencies in the contract that must either have been satisfied or expired before the foreclosure action may be commenced to consummate the sale, whichever thirty-day time frame is later, the mortgagee shall commence a foreclosure by market sale by writ, summons and complaint. Any such complaint shall claim, in the prayer for relief, a foreclosure of the mortgage pursuant to sections 49-24 to 49-24g, inclusive, as amended by this act, and sections 49-26 to 49-28, inclusive, [and 49-31t,] and shall contain a copy of the contract between the mortgagor and the purchaser as well as a copy of the appraisal obtained pursuant to section 49-24c. If the mortgagee has already commenced a foreclosure action at the time of either receipt of such contract or such satisfaction or expiration, then, not later than thirty days after the latest of such receipt, satisfaction or expiration, the mortgagee shall make a motion for judgment of foreclosure by market sale in accordance with the provisions of section 49-24f and attach the contract and appraisal to the motion. No mortgagee may require the employ or use of a particular list of persons licensed under chapter 392 as a condition of approval of an offer. No mortgagee may require the use of an auction or other alternative method of sale as a condition of approval of an offer once the listing agreement required pursuant to section 49-24d has been executed by the mortgagor. Nothing in this section shall be construed as requiring either the mortgagee or mortgagor to approve any offer that is made pursuant to this section.

Sec. 9. Section 49-24 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

All liens and mortgages affecting real property may, on the written motion of any party to any suit relating thereto, be foreclosed (1) by a decree of sale instead of a strict foreclosure at the discretion of the court before which the foreclosure proceedings are pending, or (2) with respect to mortgages, as defined in section 49-24a, as amended by this act, that are a first mortgage against the property, by a judgment of foreclosure by market sale upon the written motion of the mortgagee, as defined in section 49-24a, as amended by this act, and with consent of the mortgagor, as defined in section 49-24a, as amended by this act, in accordance with sections 49-24a to 49-24g, inclusive, as amended by this act, and sections 49-26 to 49-28, inclusive. [, and 49-31t.]

Sec. 10. Section 49-24a of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

For purposes of a foreclosure by market sale in accordance with this section [,] and sections 49-24b to 49-24g, inclusive, as amended by this act: [, and section 49-31t:]

(1) "Mortgage" means a mortgage deed, deed of trust or other equivalent consensual security interest on residential real property securing a loan made primarily for personal, family or household purposes that is first in priority over any other mortgages or liens encumbering the residential real property, except those liens that are given priority over a mortgage pursuant to state or federal law;

(2) "Mortgagee" means the owner or servicer of the debt secured by a mortgage;

(3) "Mortgagor" means the owner-occupant of residential real property located in this state who is also the borrower under the loan that is secured by a mortgage, other than a reverse annuity mortgage, encumbering such residential real property that is the primary residence of such owner-occupant, where the amount due on such mortgage loan, including accrued interest, late charges and other amounts secured by the mortgage, when added to amounts for which there is a prior lien by operation of law, exceeds the appraised value of the property; and

(4) "Residential real property" means a one-to-four-family dwelling occupied as a residence by a mortgagor.

Sec. 11. Subsection (b) of section 49-24b of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(b) At any time after the date provided in the notice required under subsection (a) of this section, the foreclosure of the mortgagor's mortgage may continue without any further restriction or requirement, provided the mortgagee files an affidavit with the court stating that the notice provisions of said subsection have been complied with and that either the mortgagor failed to confirm his or her election in accordance with said subsection by the date disclosed in the notice or that discussions were initiated, but (1) the mortgagee and mortgagor were unable to reach a mutually acceptable agreement to proceed; (2) based on the appraisal obtained pursuant to section 49-24c, the property does not appear to be subject to a mortgage that is eligible for foreclosure by market sale; (3) the mortgagor did not grant reasonable interior access for the appraisal required by section 49-24c; (4) the mortgagee and mortgagor were unable to reach an agreement as to a mutually acceptable listing agreement pursuant to section 49-24d; (5) a listing agreement was executed, but no offers to purchase were received; (6) an offer or offers were received, but were unacceptable to either or both the mortgagee and mortgagor; or (7) other circumstances exist that would allow the mortgagee or mortgagor to elect not to proceed with a foreclosure by market sale pursuant to sections 49-24 to 49-24g, inclusive, as amended by this act, and sections 49-26 to 49-28, inclusive, [and 49-31t,] or that would otherwise make the mortgage ineligible for foreclosure by market sale. The affidavit required by this subsection may be combined with the affidavit required by subsection (b) of section 8-265ee.

Sec. 12. Section 49-31e of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

[(a)] In an action by a lender for the foreclosure of a mortgage of residential real property, [such lender shall give notice to the homeowner of the availability of the provisions of sections 49-31d to 49-31i, inclusive, at the time the action is commenced.

(b) A homeowner who is given notice of the availability of the provisions of sections 49-31d to 49-31i, inclusive, must] the homeowner shall make application for protection from foreclosure, [within] under the provisions of sections 49-31d to 49-31i, inclusive, not later than twenty-five days [of] after the return day.

[(c) No judgment foreclosing the title to real property by strict foreclosure or by a decree of sale shall be entered unless the court is satisfied from pleadings or affidavits on file with the court that notice has been given to the homeowner against whom the foreclosure action is commenced of the availability of the provisions of sections 49-31d to 49-31i, inclusive.

(d) If a homeowner against whom the foreclosure action is commenced was not given notice of the availability of the provisions of sections 49-31d to 49-31i, inclusive, at the time the action was commenced, and such homeowner was eligible to apply for protection from foreclosure at such time, the court, upon its own motion or upon the written motion of such homeowner, may issue an order staying the foreclosure action for fifteen days during which period the homeowner may apply to the court for protection from foreclosure by submitting an application together with a financial affidavit as required by subsection (a) of section 49-31f.]

Sec. 13. Section 49-22 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) In any action brought for the foreclosure of a mortgage or lien upon land, or for any equitable relief in relation to land, the plaintiff may, in his complaint, demand possession of the land, and the court may, if it renders judgment in his favor and finds that he is entitled to the possession of the land, issue execution of ejectment, commanding the officer to eject the person or persons in possession of the land no fewer than five business days after the date of service of such execution and to put in possession thereof the plaintiff or the party to the foreclosure entitled to the possession by the provisions of the decree of said court, provided no execution shall issue against any person in possession who is not a party to the action except a transferee or lienor who is bound by the judgment by virtue of a lis pendens. The officer shall eject the person or persons in possession and may remove such person's possessions and personal effects and deliver such possessions and effects to the place of storage designated by the chief executive officer of the town for such purposes.

(b) Before any such removal, the state marshal charged with executing upon the ejectment shall give the chief executive officer of the town twenty-four hours notice of the ejectment, stating the date, time and location of such ejectment as well as a general description, if known, of the types and amount of property to be removed from the land and delivered to the designated place of storage. [Before] At least five business days before giving such notice to the chief executive officer of the town, the state marshal shall use reasonable efforts to locate and notify the person or persons in possession of the date and time such ejectment is to take place and of the possibility of a sale pursuant to subsection (c) of this section and shall provide clear instructions as to how and where such person or persons may reclaim any possessions and personal effects removed and stored pursuant to this section, including a telephone number that such person or persons may call to arrange release of such possessions and personal effects.

(c) Whenever a mortgage or lien upon land has been foreclosed and execution of ejectment issued, and the possessions and personal effects of the person in possession thereof are removed by a state marshal under this section, such possessions and effects shall be delivered by such marshal to the designated place of storage. Such removal, delivery and storage shall be at the expense of such person. If the possessions and effects are not reclaimed by such person and the expense of the storage is not paid to the chief executive officer within fifteen days after such ejectment, the chief executive officer shall sell the same at public auction, after using reasonable efforts to locate and notify such person of the sale and after posting notice of the sale for one week on the public signpost nearest to the place where the ejectment was made, if any, or at some exterior place near the office of the town clerk. The chief executive officer shall deliver to such person the net proceeds of the sale, if any, after deducting a reasonable charge for storage of such possessions and effects. If such person does not demand the net proceeds within thirty days after the sale, the chief executive officer shall turn over the net proceeds of the sale to the town treasury.

Sec. 14. Subdivision (4) of subsection (c) of section 49-31l of the 2016 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(4) Upon receipt of the mortgagor's appearance and foreclosure mediation certificate forms, and provided the court confirms the defendant in the foreclosure action is a mortgagor and that said mortgagor has sent a copy of the mediation certificate form to the plaintiff, the court shall assign the case to mediation and issue notice of such assignment to all appearing parties, which notice shall include an electronic mail address for all communications related to the mediation. The court shall issue such notice not earlier than the date five business days after the return date or by the date three business days after the date on which the court receives the mortgagor's appearance and foreclosure mediation certificate forms, whichever is later, except that if the court does not receive the appearance and foreclosure mediation certificate forms from the mortgagor by the date fifteen days after the return date for the foreclosure action, the court shall not assign the case to mediation. Promptly upon receipt of the notice of assignment, but not later than the thirty-fifth day following the return date, the mortgagee or its counsel shall deliver to the mediator, via the electronic mail address provided for communications related to the mediation, and to the mortgagor, via first class, priority or overnight mail, (A) an account history identifying all credits and debits assessed to the loan account and any related escrow account in the immediately preceding twelve-month period and an itemized statement of the amount required to reinstate the mortgage loan with accompanying information, written in plain language, to explain any codes used in the history and statement which are not otherwise self-explanatory, (B) the name, business mailing address, electronic mail address, facsimile number and direct telephone number of an individual able to respond with reasonable adequacy and promptness to questions relative to the information submitted to the mediator pursuant to this subdivision, and any subsequent updates to such contact information, which shall be provided reasonably promptly to the mediator via the electronic mail address provided for communication related to the mediation, (C) current versions of all reasonably necessary forms and a list of all documentation reasonably necessary for the mortgagee to evaluate the mortgagor for common alternatives to foreclosure that are available through the mortgagee, if any, (D) a copy of the note and mortgage, including any agreements modifying such documents, (E) summary information regarding the status of any pending foreclosure avoidance efforts being undertaken by the mortgagee, and (F) [a copy of any loss mitigation affidavit filed with the court, and (G)] at the mortgagee's option, (i) the history of foreclosure avoidance efforts with respect to the mortgagor, (ii) information regarding the condition of mortgaged property, and (iii) such other information as the mortgagee may determine is relevant to meeting the objectives of the mediation program. Following the mediator's receipt of such information, the court shall assign a mediator to the mediation and schedule a meeting with the mediator and [the mortgagor] all relevant mortgagors and shall endeavor to hold such meeting on or prior to the forty-ninth day following the return date. The notice of such meeting shall instruct the mortgagor to complete the forms prior to the meeting and to furnish such forms together with the documentation contained in the list, as provided by the mortgagee following the filing of the foreclosure mediation certificate, at the meeting. At such meeting, the mediator shall review such forms and documentation with the mortgagor, along with the information supplied by the mortgagee, in order to discuss the options that may be available to the mortgagor, including any community-based resources, and assist the mortgagor in completing the forms and furnishing the documentation necessary for the mortgagee to evaluate the mortgagor for alternatives to foreclosure. The mediator may elect to schedule subsequent meetings with the mortgagor and determine whether any mortgagor may be excused from an in-person appearance at such subsequent meeting. The mediator may excuse any mortgagor from attending such meeting or any subsequent meetings, provided the mortgagor shows cause for nonattendance. Such cause may include, but is not limited to, the mortgagor no longer owning the home pursuant to a judgment of marital dissolution and related transfer via deed or no longer residing in the home. As soon as practicable, but in no case later than the eighty-fourth day following the return date, or the extended deadline if such an extended deadline is established pursuant to this subdivision, the mediator shall facilitate and confirm the submission by the mortgagor of the forms and documentation to the mortgagee's counsel via electronic means and, at the mortgagee's election, directly to the mortgagee per the mortgagee's instruction, and determine, based on the participating mortgagor's attendance at the meetings and the extent the mortgagor completed the forms and furnished the documentation contemplated in this subdivision, or failed to perform such tasks through no material fault of the mortgagee, and file a report with the court indicating, (I) whether mediation shall be scheduled with the mortgagee, (II) whether the mortgagor attended scheduled meetings with the mediator, (III) whether the mortgagor fully or substantially completed the forms and furnished the documentation requested by the mortgagee, (IV) the date on which the mortgagee supplied the forms and documentation, and (V) any other information the mediator determines to be relevant to the objectives of the mediation program. The mediator may file, and the court may grant, a motion for extension of the premediation period beyond the eighty-fourth day following the return date if good cause can be shown for such an extension. Any such motion shall be filed, with a copy simultaneously sent to the mortgagee and as soon as practicable to the mortgagor, not later than the eighty-fourth day following the return date. The mortgagee and mortgagor shall each have five business days from the day the motion was filed to file an objection or supplemental papers, and the court shall issue its ruling, without a hearing, not later than ten business days from the date the motion was filed. If the court determines that good cause exists for an extension, the court shall therewith establish an extended deadline so that the premediation period shall end as soon thereafter as may be practicable, but not later than thirty-five days from the date of the ruling, taking into account the complexity of the mortgagor's financial circumstances, the mortgagee's documentation requirements, and the timeliness of the mortgagee's and mortgagor's compliance with their respective premediation obligations. If the court denies the mediator's motion, the extended deadline for purposes of this subdivision shall be three days after the court rules on the motion. No meeting or communication between the mediator and mortgagor under this subdivision shall be treated as an impermissible ex parte communication. If the mediator determines that the mortgagee shall participate in mediation, the court shall promptly issue notice to all parties of such determination and schedule a mediation session between the mortgagee and [mortgagor] relevant mortgagors in accordance with subsection (c) of section 49-31n to be held not later than five weeks following the submission to the mortgagee of the forms and documentation contemplated in this subdivision. The mediator may excuse any mortgagor from attending the mediation session or subsequent meetings, provided cause is shown for nonattendance. Such cause may include, but is not limited to, the mortgagor no longer owning the home pursuant to a judgment of marital dissolution and related transfer via deed or no longer residing in the home. If the mediator determines that no sessions between the mortgagee and mortgagor shall be scheduled, the court shall promptly issue notice to all parties regarding such determination and mediation shall be terminated. Any mortgagor wishing to contest such determination shall petition the court and show good cause for reinclusion in the mediation program, including, but not limited to, a material change in financial circumstances or a mistake or misunderstanding of the facts by the mediator.

Sec. 15. Subdivision (2) of subsection (b) of section 49-31n of the 2016 supplement to the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(2) The first mediation session shall be held not later than fifteen business days after the court sends notice to all parties that a foreclosure mediation request form has been submitted to the court. The mortgagor and mortgagee shall appear in person at each mediation session and shall have the ability to mediate, except that (A) if a party is represented by counsel, the party's counsel may appear in lieu of the party to represent the party's interests at the mediation, provided the party has the ability to mediate, [the mortgagor attends the first mediation session in person,] and the party is available (i) during the mediation session by telephone, and (ii) to participate in the mediation session by speakerphone, provided an opportunity is afforded for confidential discussions between the party and party's counsel, (B) following the initial mediation session, if there are two or more mortgagors who are self-represented, only one mortgagor shall be required to appear in person at each subsequent mediation session unless good cause is shown, provided the other mortgagors are available (i) during the mediation session, and (ii) to participate in the mediation session by speakerphone, [and] (C) if a party suffers from a disability or other significant hardship that imposes an undue burden on such party to appear in person, the mediator may grant permission to such party to participate in the mediation session by telephone, and (D) a mortgagor may be excused from appearing at the mediation session if cause is shown that the presence of such mortgagor is not needed to further the interests of mediation. Such cause may include, but is not limited to, the mortgagor no longer owning the home pursuant to a judgment of marital dissolution and related transfer via deed or no longer residing in the home. A mortgagor's spouse, who is not a mortgagor but who lives in the subject property, may appear at each mediation session, provided all appearing mortgagors consent, in writing, to such spouse's appearance or such spouse shows good cause for his or her appearance and the mortgagors consent in writing to the disclosure of nonpublic personal information to such spouse. If the mortgagor has submitted a complete package of financial documentation in connection with a request for a particular foreclosure alternative, the mortgagee shall have thirty-five days from the receipt of the completed package to respond with a decision and, if the decision is a denial of the request, provide the reasons for such denial. If the mortgagor has, in connection with a request for a foreclosure alternative, submitted a financial package that is not complete, or if the mortgagee's evaluation of a complete package reveals that additional information is necessary to underwrite the request, the mortgagee shall request the missing or additional information within a reasonable period of time of such evaluation. If the mortgagee's evaluation of a complete package reveals that additional information is necessary to underwrite the request, the thirty-five-day deadline for a response shall be extended but only for so long as is reasonable given the timing of the mortgagor's submission of such additional information and the nature and context of the required underwriting. Not later than the third business day after each mediation session held on or after June 18, 2013, the mediator shall file with the court a report indicating, to the extent applicable, (i) the extent to which each of the parties complied with the requirements set forth in this subdivision, including the requirement to engage in conduct that is consistent with the objectives of the mediation program and to possess the ability to mediate, (ii) whether the mortgagor submitted a complete package of financial documentation to the mortgagee, (iii) a general description of the foreclosure alternative being requested by the mortgagor, (iv) whether the mortgagor has previously been evaluated for similar requests, whether prior to mediation or in mediation, and, if so, whether there has been any apparent change in circumstances since a decision was made with respect to that prior evaluation, (v) whether the mortgagee has responded to the mortgagor's request for a foreclosure alternative and, if so, a description of the response and whether the mediator is aware of any material reason not to agree with the response, (vi) whether the mortgagor has responded to an offer made by the mortgagee on a reasonably timely basis, and if so, an explanation of the response, (vii) whether the mortgagee has requested additional information from the mortgagor and, if so, the stated reasons for the request and the date by which such additional information shall be submitted so that information previously submitted by the mortgagor, to the extent possible, may still be used by the mortgagee in conducting its review, (viii) whether the mortgagor has supplied, on a reasonably timely basis, any additional information that was reasonably requested by the mortgagee, and, if not, the stated reason for not doing so, (ix) if information provided by the mortgagor is no longer current for purposes of evaluating a foreclosure alternative, a description of the out-of-date information and an explanation as to how and why such information is no longer current, (x) whether the mortgagee has provided a reasonable explanation of the basis for a decision to deny a request for a loss mitigation option or foreclosure alternative and whether the mediator is aware of any material reason not to agree with that decision, (xi) whether the mortgagee has complied with the time frames set forth in this subdivision for responding to requests for decisions, (xii) if a subsequent mediation session is expected to occur, a general description of the expectations for such subsequent session and for the parties prior to such subsequent session and, if not otherwise addressed in the report, whether the parties satisfied the expectations set forth in previous reports, and (xiii) a determination of whether the parties will benefit from further mediation. The mediator shall deliver a copy of such report to each party to the mediation when the mediator files the report. The parties shall have the opportunity to submit their own supplemental information following the filing of the report, provided such supplemental information shall be submitted not later than five business days following the receipt of the mediator's report. Any request by the mortgagee to the mortgagor for additional or updated financial documentation shall be made in writing. The court may impose sanctions on any party or on counsel to a party if such party or such counsel engages in intentional or a pattern or practice of conduct during the mediation process that is contrary to the objectives of the mediation program. Any sanction that is imposed shall be proportional to the conduct and consistent with the objectives of the mediation program. Available sanctions shall include, but not be limited to, terminating mediation, ordering the mortgagor or mortgagee to mediate in person, forbidding the mortgagee from charging the mortgagor for the mortgagee's attorney's fees, awarding attorney's fees, and imposing fines. In the case of egregious misconduct, the sanctions shall be heightened. The court shall not award attorney's fees to any mortgagee for time spent in any mediation session if the court finds that such mortgagee has failed to comply with this subdivision, unless the court finds reasonable cause for such failure.

Sec. 16. Subdivision (2) of subsection (c) of section 49-31n of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(2) The mortgagor and mortgagee shall appear in person at each mediation session and shall have the ability to mediate, except that (A) if a party is represented by counsel, the party's counsel may appear in lieu of the party to represent the party's interests at the mediation, provided the party has the ability to mediate, the mortgagor attends the first mediation session in person and the party is available (i) during the mediation session by telephone, and (ii) to participate in the mediation session by speakerphone, provided an opportunity is afforded for confidential discussions between the party and party's counsel, (B) following the initial mediation session, if there are two or more mortgagors who are self-represented, only one mortgagor shall be required to appear in person at each subsequent mediation session unless good cause is shown, provided the other mortgagors are available (i) during the mediation session, and (ii) to participate in the mediation session by speakerphone, [and] (C) if a party suffers from a disability or other significant hardship that imposes an undue burden on such party to appear in person, the mediator may grant permission to such party to participate in the mediation session by telephone, and (D) a mortgagor may be excused from appearing at the mediation session if cause is shown that the presence of such mortgagor is not needed to further the interests of mediation. Such cause may include, but is not limited to, the mortgagor no longer owning the home pursuant to a judgment of marital dissolution and related transfer via deed or no longer residing in the home. A mortgagor's spouse, who is not a mortgagor but who lives in the subject property, may appear at each mediation session, provided all appearing mortgagors consent, in writing, to such spouse's appearance or such spouse shows good cause for his or her appearance and the mortgagors consent, in writing, to the disclosure of nonpublic personal information to such spouse. If the mortgagor has submitted a complete package of financial documentation in connection with a request for a particular foreclosure alternative, the mortgagee shall have thirty-five days from the receipt of the completed package to respond with a decision and, if the decision is a denial of the request, provide the reasons for such denial. If the mortgagor has, in connection with a request for a foreclosure alternative, submitted a financial package that is not complete, or if the mortgagee's evaluation of a complete package reveals that additional information is necessary to underwrite the request, the mortgagee shall request the missing or additional information within a reasonable period of time of such evaluation. If the mortgagee's evaluation of a complete package reveals that additional information is necessary to underwrite the request, the thirty-five-day deadline for a response shall be extended but only for so long as is reasonable given the timing of the mortgagor's submission of such additional information and the nature and context of the required underwriting. Not later than the third business day after each mediation session, the mediator shall file with the court a report indicating, to the extent applicable, (i) the extent to which each of the parties complied with the requirements set forth in this subdivision, including the requirement to engage in conduct that is consistent with the objectives of the mediation program and to possess the ability to mediate, (ii) whether the mortgagor submitted a complete package of financial documentation to the mortgagee, (iii) a general description of the foreclosure alternative being requested by the mortgagor, (iv) whether the mortgagor has previously been evaluated for similar requests, whether prior to mediation or in mediation, and, if so, whether there has been any apparent change in circumstances since a decision was made with respect to that prior evaluation, (v) whether the mortgagee has responded to the mortgagor's request for a foreclosure alternative and, if so, a description of the response and whether the mediator is aware of any material reason not to agree with the response, (vi) whether the mortgagor has responded to an offer made by the mortgagee on a reasonably timely basis, and if so, an explanation of the response, (vii) whether the mortgagee has requested additional information from the mortgagor and, if so, the stated reasons for the request and the date by which such additional information shall be submitted so that information previously submitted by the mortgagor, to the extent possible, may still be used by the mortgagee in conducting its review, (viii) whether the mortgagor has supplied, on a reasonably timely basis, any additional information that was reasonably requested by the mortgagee, and, if not, the stated reason for not doing so, (ix) if information provided by the mortgagor is no longer current for purposes of evaluating a foreclosure alternative, a description of the out-of-date information and an explanation as to how and why such information is no longer current, (x) whether the mortgagee has provided a reasonable explanation of the basis for a decision to deny a request for a loss mitigation option or foreclosure alternative and whether the mediator is aware of any material reason not to agree with that decision, (xi) whether the mortgagee has complied with the time frames set forth in this subdivision for responding to requests for decisions, (xii) if a subsequent mediation session is expected to occur, a general description of the expectations for such subsequent session and for the parties prior to such subsequent session and, if not otherwise addressed in the report, whether the parties satisfied the expectations set forth in previous reports, and (xiii) a determination of whether the parties will benefit from further mediation. The mediator shall deliver a copy of such report to each party to the mediation when the mediator files the report. The parties shall have the opportunity to submit their own supplemental information following the filing of the report, provided such supplemental information shall be submitted not later than five business days following the receipt of the mediator's report. Any request by the mortgagee to the mortgagor for additional or updated financial documentation shall be made in writing. The court may impose sanctions on any party or on counsel to a party if such party or such counsel engages in intentional or a pattern or practice of conduct during the mediation process that is contrary to the objectives of the mediation program. Any sanction that is imposed shall be proportional to the conduct and consistent with the objectives of the mediation program. Available sanctions shall include, but not be limited to, terminating mediation, ordering the mortgagor or mortgagee to mediate in person, forbidding the mortgagee from charging the mortgagor for the mortgagee's attorney's fees, awarding attorney's fees, and imposing fines. In the case of egregious misconduct, the sanctions shall be heightened. The court shall not award attorney's fees to any mortgagee for time spent in any mediation session if the court finds that such mortgagee has failed to comply with this subdivision, unless the court finds reasonable cause for such failure.

Sec. 17. Sections 49-31t and 49-31u of the general statutes are repealed. (Effective from passage)

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

Section 1

from passage

New section

Sec. 2

from passage

New section

Sec. 3

from passage

New section

Sec. 4

from passage

New section

Sec. 5

from passage

New section

Sec. 6

from passage

New section

Sec. 7

from passage

49-24b(a)

Sec. 8

from passage

49-24e(a) and (b)

Sec. 9

from passage

49-24

Sec. 10

from passage

49-24a

Sec. 11

from passage

49-24b(b)

Sec. 12

from passage

49-31e

Sec. 13

from passage

49-22

Sec. 14

from passage

49-31l(c)(4)

Sec. 15

from passage

49-31n(b)(2)

Sec. 16

from passage

49-31n(c)(2)

Sec. 17

from passage

Repealer section

BA

Joint Favorable Subst.

 

JUD

Joint Favorable