Governor Rell Proposes New Relief

for Families Facing Foreclosure

Governor Announces Measures to Speed

Mortgage Relief to Homeowners

Governor M. Jodi Rell today proposed a sweeping overhaul of state programs that assist families facing foreclosure, including programs that offer mortgage modifications, delinquency repayment plans and direct mortgage assistance.

“Since the beginning of the sub-prime lending crisis, more than fifteen thousand Connecticut families have been able to avoid foreclosure and keep their homes with the help of state programs designed to assist those borrowers,” Governor Rell said.  “But with many families still in danger of foreclosure, we are making major changes to our mortgage assistance programs so that more families will be eligible and can successfully apply.

“Homeownership is not only central to the American Dream, it is one of the cornerstones of our economy,” the Governor said. “People invest so much of themselves in their homes and our mortgage assistance programs represent an important part of the safety net supporting Connecticut citizens during this national recession. There are some people our programs cannot help, like those who never should have qualified for a mortgage in the first place or who acted irresponsibly. Nonetheless, our mortgage assistance programs did not serve as many families as we had hoped and these measures will allow us to help more people.”  

Governor Rell noted that the program changes will be accomplished without the additional expenditure of State dollars because the federal funds that support these proposals are already in hand. Because the programs supported by federal dollars may eliminate the need for some state services, the State's costs may actually be reduced.

Governor Rell thanked Rep. Ryan Barry, co-chair of the legislature’s Banking Committee and sponsor of the legislation that created the CT FAMLIES program, for his support and advocacy of CTFAMLIES and other programs to assist citizens facing foreclosure.

“By expanding eligibility and providing more support for families facing foreclosure, we will be able to help more Connecticut families remain in their homes,” Rep. Barry said. “These are important program changes that will contribute to the economic health of both families and their communities.”

Several weeks ago, Governor Rell directed the Connecticut Department of Banking and the Connecticut Housing Finance Authority (CHFA) to evaluate existing mortgage assistance programs and propose responsible modifications that would make more families eligible to participate in them.  After reviewing their recommendations, the Governor is proposing the following modifications to each of the programs:

Emergency Mortgage Assistance Program (EMAP)

q       Open eligibility requirements to allow homeowners who are 60
days delinquent to apply for assistance.

q       Use already available federal grant funds to expand the
availability of counseling to more homeowners.

q       Enable counseling agencies and judicial mediators to use EMAP as
a tool in negotiating mortgage modifications.

q       Allow flexibility in considering hardships where the homeowner
has not suffered a 25 percent reduction in income when there is an
unanticipated rise in housing or other expenses.

Connecticut Fair Alternative Mortgage Lending Initiative and Education
Services (CT FAMLIES)

q       Continue to offer the CT FAMLIES Program as a refinance option
for homeowners facing adjustable rate resets and those struggling with
high interest mortgages.

q       Expand the program to allow homeowners with FHA insured
mortgages to participate

q       Create new options that will enable homeowners in the early stages
of delinquency to refinance using the CT FAMLIES Program

Homeowner's Equity Recovery Opportunity Loan Program
(HERO)
     

q       Expand the program eligibility to include two, three and four
unit owner-occupied properties.

q       Eliminate restrictive program requirements which will enable
CHFA to have greater flexibility in negotiating the purchase of mortgage
loans; the CHFA adopted certain federal requirements which they have the
authority to change.

EMAP is a loan assistance program that helps homeowners -- who are facing a temporary financial hardship due to extenuating circumstances -- to pay a portion of their mortgage payment for up to a five-year period.  The Governor's proposal would modify the rigid eligibility and qualifying standards in the current law.

CT FAMLIES is a refinance program that offers low-to-moderate income homeowners the opportunity to refinance their non-FHA mortgage into an affordable 30-year fixed rate mortgage loan.  CT FAMLIES has assisted over 73 homeowners to date to refinance their homes with an average savings of $397 per month.

HERO is a loan program designed to improve the financial situation of Connecticut homeowners who are not able to afford their current mortgage payments.  A HERO loan is provided when the homeowner's current lender is willing to negotiate the sale of their mortgage to CHFA at terms that enable CHFA to purchase the mortgage and modify it to repayment terms that are affordable for the homeowner.

CHFA has been awarded $681,230 in National Foreclosure Mitigation Counseling grants to support Foreclosure Prevention counseling efforts in Connecticut. These funds will provide additional services to homeowners who are seeking foreclosure prevention assistance.

“In the current economy, many Connecticut homeowners continue to face financial difficulties,” Governor Rell said.  “Important initiatives are underway at the state and national levels to try to restore our economic strength and we are acting now to protect our families until the economy recovers.”