Homeowners Facing Foreclosure Get a Lifeline: General Assembly Extends Mediation Program For Another Year

July 14, 2010 – (RealEstateRama) — Senate President Donald E. Williams, Jr. (D-Brooklyn) joined State Rep. Susan Johnson (D-Willimantic); representatives from the Access Community Action Agency in Willimantic, and the Connecticut Fair Housing Center for a news conference in Willimantic today to announce that the state’s landmark foreclosure mediation program is being extended for another year.

Speakers included Peter DeBiasi, Executive Director/CEO of the Access Agency; Erin Kemple, executive director of the Connecticut Fair Housing Center, Roger Adams, Executive Director for the Windham Region Chamber of Commerce, and two women who faced foreclosure—one from Putnam and the other from Willimantic.

The program is designed to give homeowners who are facing foreclosure the opportunity to meet with their lenders in order to work out a resolution that avoids foreclosure when possible. The mediation program also strengthens due process protections for homeowners facing foreclosure.

“Continuation of this program isn’t just a good thing for families facing foreclosure,” said Senator Williams. “Keeping people in their homes helps stabilize neighborhoods, maintains property values, and contributes to improved public safety. Windham County has been hit hard by the foreclosure crisis but this mediation program has—and will—make a real difference.”

Originally, the program was available to homeowners who requested participation through the court after receiving a notice of foreclosure. After witnessing the success of the program, the legislature passed PA 09-209 which requires that all homeowners who file an appearance in their foreclosure action participate in the foreclosure mediation program.

“As a lawyer who has represented clients who are involved with the difficult issue of foreclosure and as a State Representative who hears some of my constituents’ difficulties as neighbors or as victims of this economy, I can see that this new mediation initiative helps banks, neighborhoods, home owners and tenants,” said Rep. Johnson. “The chance to have an impartial mediator through our court system ensures that those who can really afford their homes with minor adjustments in refinancing will be able to stay in their homes limiting vacancies in already fragile neighborhoods. This will save the lending institutions money because the properties will continue to be maintained and keep our local economies going though this difficult economic down-turn.”

According to RealtyTrac, a California-based company that tracks housing stats, there were 85 new foreclosed properties in Windham County in May 2010. Windham County has the highest percentage of foreclosures among Connecticut’s eight counties. Analysts at RealtyTrac report that Windham County has one foreclosure notice for every 554 homes.

“We’ve been in our home for 16 years,” said Gwen Nelson-Bichard of Putnam. “Just when we thought things were turning around the economy started spiraling down. We’ve been able to stay in our home and have peace of mind. This is a real viable process.”

“The CT Fair Housing Center has been working on the foreclosure crisis since 2003, we know what it was like prior to the Mediation Program’s inception in 2008, and before it became mandatory in 2009,” said Erin Kemple. “Homeowners spent frustrating hours trying to get an answer from their mortgage servicer while attempting to litigate arcane points of foreclosure law in order to save their homes. Few were successful. Now, the patient, compassionate and hard working mediators allow the homeowners to focus on saving their homes, rather than trying to litigate their cases.”

Since its inception, the mediation program has helped hundreds of families in Windham County. Settlements have been reached in nearly half (406) of all foreclosures in Windham County (927) for the last 12 months. Statewide, the program has helped more nearly 5,000 families reach a settlement with their lenders—including 3,900 families who have been able to stay in their home.

“Measures that allow folks to stay in their homes creates continuity in neighborhoods, avoid blight, and helps the economy,” said Roger Adams, executive director of the Windham Region Chamber of Commerce.

The program, administered by the Judicial Branch in 12 judicial districts, is available to homeowners who reside in a one- to four-family residential property. Mediation sessions address all issues including but not limited to reinstatement of mortgage, assignment of law days and sale dates, restructuring of the mortgage debt and foreclosure by decree of sale.

The foreclosure mediation program has been touted as a national model in numerous recent studies. The Center for American Progress released a report, “It’s Time We Talked: Mandatory Mediation in the Foreclosure Process.” The report includes best practices and recommendations that come directly from Connecticut’s program.

In addition to extending the foreclosure mediation program, the General Assembly also passed several laws that address the foreclosure crisis. Senate Bill 501, signed into law last month, includes language that exempts foreclosed properties and ‘short sales’ from the real estate conveyance tax. The changes mean that homeowners facing foreclosure won’t face the additional challenge of paying the conveyance tax.

The General Assembly also approved Senate Bill 502, which includes enhancements to the CT Families and the Homeowner’s Equity Recovery (HERO) loan program operated by the CT Housing Finance Authority (CHFA). The new law allows the CHFA to make mortgage loans to borrowers who purchase (1) foreclosed properties, (2) abandoned properties, or (3) properties conveyed by deed in lieu of foreclosure or short sale.