New Haven Homeowners Facing Foreclosure Get a Lifeline: General Assembly Extends Mediation Program

Latest stats show New Haven County still leads CT; 1 in every 649 housing units received a foreclosure filing in June 2010

New Haven, CT – July 22, 2010 – (RealEstateRama) — Senate Majority Leader Martin Looney (D-New Haven) and Senator Toni Harp (D-New Haven) joined New Haven Mayor John DeStefano; State Rep. Juan Candelaria; representatives from the ROOF (Real Options Overcoming Foreclosure) Project, and the Connecticut Fair Housing Center, and residents who have faced foreclosure for a news conference in New Haven today to announce that the state’s landmark foreclosure mediation program is being extended for another two years.

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.

“Families facing aren’t the only ones who benefit from the continuation of this program,” said Senator Looney. “We know that keeping people in their homes helps neighborhoods, maintains property values, and improves public safety. New Haven has been hit hard by the foreclosure crisis but this mediation program has—and will—make a real difference.”

“Homeowners don’t ordinarily face foreclosure proceedings without unforeseeable, extenuating circumstances that are very often temporary; this mediation program provides a perfect setting for each of those extraordinary situations to be worked out individually,” Senator Harp said. “I think in the vast majority of these cases the homeowner deserves the benefit of a doubt, and this program has already helped many financially troubled homeowners stay on their property, providing an element of certainty and stability to affected families and neighborhoods.”

“The foreclosure crisis has affected communities nationwide,” said Mayor DeStefano. “But in New Haven, we’re working together to minimize the impact and help families before they reach the point of foreclosure. Through ROOF and related partnerships we’ve been able to educate many residents about creating wealth, understanding what they can afford and making responsible financial decisions. It’s important for residents to know that if they find themselves at risk for foreclosure, they don’t have to go through this alone. If you are in trouble with your mortgage, there are people who want to work with you whether it be through ROOF, the State mediation program or other trusted resources that can help you find the best options available to you and your family.”

“This is a very important accomplishment for homeowners at a time when our economy keeps struggling with its recovery,” Rep. Candelaria stated. “Extending this program will allow many more families in our state to stay in their homes while they continue to work hard to improve their personal circumstances.”

“The mediation program has helped more than 4,400 homeowners keep their homes, and in doing so, has saved Connecticut taxpayers millions of dollars,” said Jeff Gentes, the Foreclosure Prevention Staff Attorney for the Connecticut Fair Housing Center. “We are thrilled the program was re-authorized for two more years, and know it can continue to add to its first two years of success.”

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.

According to RealtyTrac, a California-based company that tracks housing stats:

• Since the foreclosure crisis began in 2008, Greater New Haven has had more foreclosure filings (7,987) than any other county in Connecticut.
• In New Haven County there were 539 foreclosed properties, that is 1 in every 649 housing units received a foreclosure filing in June 2010.
• In the city of New Haven there were 87 properties foreclosed on in June: that is one in every 606 housing units.

Since its inception, the mediation program has helped hundreds of families in Greater New Haven. Settlements have been reached in about one third (1,237) of all foreclosures in New Haven (4,115) 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.

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.

Press Aide
Laurence Grotheer
860-240-8820
Laurence.Grotheer (at) cga.ct (dot) gov