Malloy Signs Foreclosure Protections Act into Law in Stamford

Governor Dannel P. Malloy joined Banks Committee co-chairs Sen. Carlo Leone and Rep. William Tong and a number of other state, local and banking officials in Stamford Tuesday to sign a bill granting new protections for homeowners facing foreclosure and streamlining the mediation process. 

"Ensuring a fair and expedient process for everyone in a foreclosure process is an important step towards protecting people and neighborhoods across Connecticut," Malloy said. "Everyone involved benefits when the properties remain occupied and families have access to stable housing."

The officials met at the Housing Development Fund offices on Prospect Street in Stamford. The HDF, a statewide resource with offices in Danbury and Bridgeport as well, "helps make affordable housing available to hundreds of low- and moderate-income households."

The bill, Public Act 13-136, provides a judicial branch mediator to lenders and homeowners to try and work out a mutually-beneficial agreement to address outstanding payments and avoid foreclosure. It also requires all parties involved in the mediation process to act in "good faith and without delay."

"This new law will ensure lenders are more responsive to homeowners by requiring banks to have a representative who has full settlement authority to be be present at each mediation session," Malloy said. "Now, the lending institutions or their representatives are required to have someone there who could make a decision [to forward the mediation process.]"

Jerome Murray, 39, of Stratford, lives in a home with his wife, three kids and 77-year-old father, a Korean War veteran. He was present at the signing to comment on what it's like to be someone in the middle of the foreclosure process, how the Housing Development Fund has helped his family keep a roof over their heads and how he hopes the new bill will provide him with some clearer direction. 

"I've been in mediation for a little over two years now, working with the Housing Development Fund," Murray said. "I love my home. I want to keep my home. I can afford my home. My dad and I have the ability to pay. I've sent Bank of America all required documents, but the process has been slow to get the loan modified... I hope with these new upcoming changes, it will speed up the mediation process and help to get my loan modified for me and my family."

For both lenders and homeowners involved in the mediation process, the new law lays out specific guidelines for their participation in the mediation process, according to Malloy's office: 

• Lenders must provide the borrower with a complete account history of their mortgage, along with other related information;
  
• Borrowers must assemble and provide a complete financial package to the lender at the beginning of the mediation period and in connection with requests for a foreclosure alternatives;
  
• The newly-defined “Objectives of the Mediation Program” are to determine whether parties can reach an agreement to avoid foreclosure, or, failing that, to expedite the foreclosure in a manner acceptable to the parties.  The “ability to mediate” means that the parties must be willing and able to participate in the mediation process in good faith without unreasonable delay.
  
• Lenders and their counsel must be familiar with the borrower’s loan file, available options for alternatives, and the history of prior mediation sessions, as reflected in the mediator’s reports.