Governor Rell Unveils $50 Million “CT FAMLIES” Refinancing Program to Assist Subprime Borrowers
New Program Will Provide Stable Mortgages With Affordable Terms and Rates
Final Report of Governor’s Sub-Prime Mortgage Task Force
Governor M. Jodi Rell today announced “CT FAMLIES” — a new $50 million refinancing program to address the subprime mortgage crisis in Connecticut. There are approximately 71,000 active sub-prime mortgages in Connecticut and many are delinquent and in danger of default. Approximately 21,000 of these adjustable rate (sub-prime) mortgages are scheduled to reset at much higher rates between October 2007 and December 2009. The Connecticut Housing Finance Authority (CHFA) will administer the program.
“Many homeowners in Connecticut are struggling with mortgage payments that suddenly and dramatically increased as a result of sharply higher interest rates,” Governor Rell said. “Many of these families are low- and moderate-income households and many were first-time buyers. This issue is about protecting the most important investment many of these families have ever made. Homeownership is the American Dream and it is a dream we have an obligation to protect and secure.”
Under the new program, borrowers with a subprime mortgage who cannot make their mortgage payment and currently reside in their home may apply to CHFA for refinancing. The new CT FAMLIES program will assist low and moderate income borrowers who took out a subprime loan to purchase their first home by refinancing them into 30-year, fixed rate amortizing loans. CT FAMLIES loans will be offered at .25% above CHFA’s regular rate, which is currently 6.00%.
“The CT FAMLIES refinancing program will help get these borrowers back into a stable mortgage with rates and terms they can afford,” Governor Rell said. “This program will help many families keep their homes. A stable housing market is critical to a strong and growing economy and vital to the success of strong neighborhoods and healthy communities.”
On April 10, Governor Rell convened a Sub-Prime Mortgage Task Force to determine the scope of the problem in Connecticut, to complete a definitive analysis of the issue including the number of Connecticut families currently holding sub-prime mortgages and the number in foreclosure and to make recommendations regarding how those families might be helped.
The Task Force found that sub-prime mortgage lending increased dramatically nationally and in Connecticut from 2001 through 2006 and that underwriting standards were noticeably relaxed during this time period. Significant defaults of sub-prime loans led to a general tightening of credit for sub-prime borrowers making refinancing difficult or not available and exposing many borrowers to significant payment increases and additional defaults.
The Task Force released preliminary recommendations calling for additional counseling services to assist distressed borrowers and a refinancing program for sub-prime first-time home buyers. The final report and recommendations of the Task Force are expected in the near future.
CHFA will begin taking applications for the new CT FAMLIES program on December 10th. A call center (tel. 860-571-3500) has been set up at CHFA to help borrowers determine if they will qualify for the program.
