Connecticut House Bill HB05567

Connecticut 2016 Regular Session

• Introduced: 3/3/16
• Refer: 3/3/16
• Report Pass: 3/17/16
• Refer: 3/28/16
• Report Pass: 4/4/16
• Refer: 4/12/16
• Report Pass: 4/15/16

Caption

An Act Concerning Alternatives To Foreclosures, The Foreclosure Mediation Program, And The Mortgagor In Good Standing Statutes.

Impact

This legislation is expected to amend existing foreclosure laws significantly by providing clearer pathways for mediation and modification of underwater mortgages. By empowering homeowners with options to modify their obligations, the bill aims to lessen the negative impact and incidence of foreclosure, promoting housing stability. However, it also places particular procedural requirements on mortgagees regarding notice and mediation processes that may streamline approaches to foreclosure while ensuring that mortgagors receive timely notifications and opportunities for mitigation.

Summary

House Bill 05567 seeks to provide alternative solutions to foreclosure situations, particularly focusing on underwater mortgages. The bill introduces measures that allow for the modification of mortgages in distress without requiring the consent of junior lien holders, thereby giving courts the power to facilitate mortgage relief efforts effectively. Key provisions include the ability for mortgagees and mortgagors to file motions for judgment of loss mitigation and to transfer properties in satisfaction of mortgage obligations, thus creating avenues for foreclosure alternatives that may relieve financial burdens on homeowners.

Sentiment

The response to HB 05567 has been largely supportive among local advocates and those aiming to improve homeowner protections, especially within communities facing economic hardships. Supporters argue that the bill reflects a compassionate approach to managing financial distress and that it facilitates solutions beneficial for both homeowners and lenders. Conversely, some skepticism exists regarding the feasibility and efficacy of the proposed modifications in a complex real estate market, with concerns about potential unintended consequences for junior lienholders and the adequacy of readily available resources for mediation.

Contention

Notably, the bill raises questions about the balance of power between mortgagees and mortgagors, particularly regarding the alterations in the authority related to foreclosure processes. There is also apprehension concerning the bill's implications for junior lienholders, who may see their interests diminished as mortgages are modified or properties transferred without their consent. The debate centers on the necessity of protective measures for vulnerable homeowners against potential overreach by major financial institutions while ensuring the rights of all stakeholders involved in mortgage agreements.