CT News Junkie is reporting an announcement made by our local democratic leaders including Senator LeBeau, Mayor Currey and Councilman (and current house candidate) Rojas.
The team gathered to announce the impending salvation of, or at least lip service to, foreclosure assistance. As you may or may not know the legislature passed a foreclosure relief bill which was subsequently signed by the governor. Here are some highlights:
- The state through CHFA will use our tax dollars to buy foreclosed properties to resell at discount to targeted buyers or use for public housing.
- The state through CHFA will make mortgage payments on behalf of approved persons experiencing a “financial hardship” despite the fact that such hardship insurance is and has been privately available to these persons and they declined to purchase it. The state may pay an approved person’s mortgage for as long as FIVE YEARS.
(7) “Financial hardship due to circumstances beyond the mortgagor’s control” means: A significant reduction of at least twenty-five per cent of aggregate family household income which reasonably cannot be or could not have been alleviated by the liquidation of assets by the mortgagor, including, but not limited to, a reduction resulting from (i) unemployment or underemployment of one or more of the mortgagors; (ii) a loss, reduction or delay in receipt of such federal, state or municipal benefits as Social Security, supplemental security income, public assistance and government pensions; (iii) a loss, reduction or delay in receipt of such private benefits as pension, disability, annuity or retirement benefits; (iv) divorce or a loss of support payments; (v) disability, illness or death of a mortgagor; (vi) uninsured damage to the mortgaged property which affects liveability and necessitates costly repairs; or (vii) expenses related to the disability, illness or death of a member of the mortgagor’s family, but is not related to accumulation of installment debt incurred for recreational or nonessential items prior to the occurrence of the alleged circumstances beyond the mortgagor’s control in an amount that would have caused the mortgagor’s total debt service to exceed sixty per cent of aggregate family income at that time; or (B) a significant increase in the dollar amount of the periodic payments required by the mortgage;
- The state will spend 2.5 MILLION dollars on job training programs for persons in foreclosure to the exclusion of those needing job training who don’t happen to be delinquent on a mortgage.
- The state through the judicial branch will hire 13 loan mediators at a price tag of over 150 THOUSAND DOLLARS EACH per year. These mediators are intended to renegotiate repayment terms with borrowers and lenders. Connecticut experienced 23,470 foreclosures last year according to Realty Trac which would have provided a workload of 1,805 foreclosures per mediator. It’s clear that this was poorly thought out and is doomed to fail from the start. The mediators are grossly overpaid, overloaded and replacing a service that already exists in the private market.
- A non-prime lender may not refinance a person out of a “special” mortgage unless the borrower attends counseling. This is a ridiculous overstepping into the borrowers private financial life and an unacceptable imposition.
“special mortgage” means a loan originated, subsidized or guaranteed by or through a state, federal, tribal or local government, or nonprofit organization.
- A non-prime lender is not permitted to include a pre-payment penalty on a loan or any provision which increases the interest rate on default. I’ve never seen the latter except in my credit card agreements, but disallowing pre-payment penalties will result in a direct increase in the interest rate to compensate. Borrowers have been able to waive pre-payment on most loans all along at the cost of a higher rate. The only difference now is that the higher rate will be the only rate.
The biggest thing to note in this long law is the total absence of any form of relief from the impositions the government places on homeowners. They have placed the burden of foreclosure relief solely on the lenders, brokers and banks as well as the taxpayers of Connecticut.
The state has failed to do anything about burdensome property taxes which at least here in East Hartford account for a full 3-4 months of mortgage payments each year. They have done nothing about income taxes or car taxes. They have done nothing about job creation. What they have created are new bureaucracies which will feed on taxpayer dollars and in turn further increase the crushing tax load which is pushing many into foreclosure.
As proud as I’m sure our representatives were to announce their excitement at having finally cracked the foreclosure problem open, I’d rather they had read this bill, found real solutions and sat this press conference out.
Tags: East Hartford, Foreclosure Assistance, Gary Lebeau, Jason Rojas, Melody Currey
