Governor M. Jodi Rell today [June 18] signed
into law a landmark bill that funds three programs to help struggling homeowners
cope with the mortgage credit crunch and imposes reforms on the mortgage
industry to avoid future problems.
“This bill sets a new national
standard for efforts to help homeowners caught up in the whirlwind of the
subprime mortgage crisis and a national economic decline,” Gov. Rell said at
the signing ceremony at a Rockville Bank branch in
Manchester. “Connecticut residents are feeling the pressure from all sides–from staggering gas prices, rising prices for all forms of energy, food prices,
and the overall cost of living–and many middle-class families are having
trouble making their mortgage. We are here to help, and with this legislation,
we will.
“The mortgage credit crunch and the
economic slump are national problems, but they are affecting
Connecticut neighborhoods and we are not standing idly by,” the governor said. “We will not allow the American dream of home ownership to
wither or allow this problem to further drag down our state’s economic outlook.
I was proud to craft this bill with our partners in the legislature, and I
believe it will serve as a model for other states looking to help their
residents hang on to their most important
investments.”
Governor Rell thanked the Banks
Committee co-chairs, state Sen. Bob Duff (D-25) and state Rep. Ryan Barry
(D-12), and ranking members, state Sen. Rob Kane (R-32) and state Rep. John Ryan
(R-141), and Department of Banking Commissioner Howard Pitkin, who worked with
her administration to develop the comprehensive
proposal.
Shortly after the credit crunch
erupted last year, Gov. Rell announced the CT FAMLIES program, a $50 million
financing program administered by the Connecticut Housing Finance Authority
(CHFA). The program was enhanced in February when the governor announced it
would allow homeowners who purchased properties with a sub-prime adjustable rate
mortgage and subsequently refinanced into another adjustable rate product to be
eligible, offer the same interest rate (6.00 percent) as the prevailing CHFA
homebuyer mortgage rate and add new lenders to originate CT FAMLIES
mortgages.
The new legislation directs $40
million to continue the CT FAMLIES program while boosting the existing Emergency
Mortgage Assistance Program with an additional $70 million and creating a new,
$30 million Homeowners Equity Recovery Opportunity program. Most of the money
for these programs is coming from existing bond
funds.
“That is not all, however,” Governor
Rell said. “We recognize that there have been structural problems that
contributed to the mortgage crisis. Those problems have to be addressed, or all
we are doing is a temporary fix.”
The bill establishes foreclosure
mediation programs to be conducted through the Judicial Branch, puts new
regulations in place on the mortgage industry–including a ban on prepayment
penalties–and expands the authority of the Department of Banking. It also sets
up a training team within the CTWorks Career Centers to help eligible borrowers
with overdue loans to find good jobs and get back on financial
track.
-Release courtesy of Gov. Rell's office.