CT Governor Signs Mediation, Fraud Bill

ticut Gov. M. Jodi Rell has signed three mortgage-related bills, including S.B.948, which makes the state's foreclosure mediation process mandatory – rather than optional – for all foreclosures that began after July 1. The bills also set new standards for mortgage professionals, expand eligibility for state mortgage assistance programs and make residential mortgage fraud a crime. ‘Far too many Connecticut families are staring at a stack of bills and wondering how they will make the next mortgage payment – or worse, despairing of ever catching up with the payments they have already missed," Rell said at the time of signing. "The majority of these are not homeowners who unwisely bought more house than they could afford. They are hardworking people who have been laid off or seen their incomes reduced as the world's economic downturn continues to take a terrible toll on our state. Others are the victims of lax – or even unscrupulous – lending practices." In addition to making foreclosure mediation mandatory, S.B.948 – An Act Concerning Implementation of the S.A.F.E. Mortgage Licensing Act – implements the 2008 Secure and Fair Enforcement for Mortgage Licensing Act by establishing conditions for licensing of mortgage professionals, including education and testing requirements. A second bill, H.B.6481, expands eligibility for two state-run assistance programs designed to help responsible homeowners facing financial hardship stay in their homes. Under current law, "financial hardship" is generally defined as a drop in household income of 25% or more that cannot be offset by selling the homeowner's assets. The definition also includes significant increases in mortgage payment amounts or other housing expenses, including the costs of heat and utilities. The legislation allows the Connecticut Housing Finance Authority (CHFA) to determine what constitutes a significant drop in the borrower's income and to broaden the definition of circumstances that are outside the homeowner's control. The new law also allows homeowners to apply for the Emergency Mortgage Assistance Program even before receiving a notice of foreclosure if they are 60 days or more delinquent on their mortgage. In addition, the new law expands eligibility for Rell's CT FAMLIES mortgage assistance program from homeowners with adjustable-rate mortgages to homeowners with all types of mortgages. The third bill, S.B.949, creates the crime of residential mortgage fraud. A single instance of mortgage fraud is a Class D felony, while multiple instances are Class C felonies. Class D felonies are punishable by a maximum of five years in prison and $5,000 in fines; Class C felonies are punishable by up to 10 years in prison and $10,000 in fines. SOURCE: Office of Connecticut Gov. M. Jo

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