Governor Rell Announces Plan to Help More Homeowners through the CT FAMLIES Program
Governor M. Jodi Rell announced today enhancements to the CT FAMLIES refinancing program to assist more homeowners caught up in the sub-prime mortgage crisis in Connecticut. The changes to the program will allow more homeowners to participate in the program and provide more direct assistance to Connecticut families facing foreclosure.
In November 2007, Governor Rell unveiled the new CT FAMLIES (Connecticut Fair Alternative Mortgage Lending Initiative and Education Services) $50 million financing program to be administered by the Connecticut Housing Finance Authority (CHFA). There are approximately 71,000 active sub-prime mortgages in the state. Of these loans, 10.5% are currently 90 days delinquent or in foreclosure. There are 21,000 adjustable rate (sub-prime) mortgages are scheduled to reset at much higher rates between the fall of 2007 and December 2009. The program was designed to assist first-time buyers who purchased a property with a sub-prime adjustable rate mortgage refinance into a 30-year fixed rate mortgage.
“Far too many families throughout Connecticut are struggling to hold onto their homes and we are extending them a helping hand through the Connecticut FAMLIES program,” Governor Rell said. “My goal since the inception of this program was to reach as many families as we possibly could and help them see their way through this mortgage nightmare. Clearly, with the mortgage crisis and rising gas and energy prices, there are more families out there in need of our help. The steps we are taking today will benefit more families and help prevent our families, friends and neighbors from becoming additional foreclosure statistics.”
Governor Rell announced today the following changes to the CT FAMLIES Program:
· Eliminate the first time homebuyer requirement and allow homeowners who purchased properties with a sub-prime adjustable rate mortgage and subsequently refinanced into another adjustable rate product to be eligible;
· Offer the same interest rate for the CT FAMLIES Program (6.00%) as the prevailing CHFA homebuyer mortgage rate; and
· Select additional lenders to originate CT FAMLIES mortgages – at present, Webster Bank, New Alliance Bank, and McCue Mortgage are participating lenders.
In addition to these programmatic changes, Governor Rell outlined a series of steps the state is taking to further awareness about the CT FAMLIES program and increase overall participation.
“Connecticut is one of a handful of states throughout the country that have established a program to help our homebuyers through this difficult time,” Governor Rell said. “There are no gimmicks involved with CT FAMLIES — these are real loans going to real people and as a result, there are some steps all of us have to take along the way to ensure the program is helping those who need it without digging a deeper hole for them as well as the state.
“Since December, when the program was fully implemented, we have listened very closely to the families this program was intended to help and one of the things we have learned that could be of most value to the homeowners is direct, one-on-one contact with the financial and credit counselors and lending institutions.”
Starting in March, CHFA is scheduling five two-day Housing Fairs in Hartford, New Haven, Bridgeport, Waterbury and Norwich. The events will give homeowners the opportunity to attend seminars on financial and credit counseling and sign up for individual informational sessions on the CT FAMLIES program as well as other programs that may provide assistance. Many of the top sub-prime servicers in Connecticut will participate in these Housing Fairs, allowing borrowers the opportunity meet directly with them and gain further insight on the options available.
Connecticut Housing Fairs
March 28 & 29: Norwich – Holiday Inn
April 11 & 12: Waterbury – Holiday Inn (was CT Grand Hotel)
April 25 & 26: Hartford – CT Convention Center
May 16 & 17: Bridgeport – Holiday Inn
May 30 & 31: New Haven – Omni Hotel
In the upcoming weeks, CHFA will air a number of public service announcements to help further awareness about the CT FAMLIES program and alert homeowners to the opportunities the Housing Fairs will provide.
CHFA began taking applications for the new CT FAMLIES program on December 10th. A call center – (860) 571-3500 – has been set up at CHFA to help assist borrowers with the program. To date, CHFA has received more than 3,000 calls, many of them seeking more information on either the CT FAMLIES program or guidance as to how to work with the current holder of their mortgage. Thirty loan reservations have been made. Six other states have developed similar programs, yet only 93 loans have been made to date.
Governor Rell has also proposed legislation this year to redefine loans in Connecticut that would fall into the sub-prime category and provide for additional disclosures that would alert consumers to the economic risks associated with these loans. The legislation also does away with any pre-payment penalty associated with sub-prime loans, calls for new disclosures, tighter underwriting qualification standards, verification of borrower income and a requirement that brokers and lenders make only those loans where there is a reasonable belief that the borrower will be able to make the payments.
“We all have to recognize that there are going to be situations where this program will not help certain families, whether due to excessive debt or because they should not have received the mortgage in the first place,” the Governor said. “While we would like to help everyone out of this nightmare, we do not have infinite resources that can cover every single situation that has brought homeowners to the brink of foreclosure. This program, however, will help thousands of families hold onto their piece of the American dream and remove the prospect of losing their home.”
