An Act Concerning Deficiency Judgments And Crumbling Foundations.
If enacted, HB 06738 would lead to amendments in section 49-14 of the general statutes, providing significant protections for homeowners. Under the bill, lenders would be restricted from reporting foreclosures or compromises related to deficiency judgments to credit reporting agencies, thereby minimizing the negative impact on borrowers' credit scores. Moreover, it assures that any defaults linked to these cases would be classified as arising from a casualty, which allows for pending insurance recoveries. This classification could provide much-needed relief to homeowners suffering from the economic consequences of crumbling foundations.
House Bill 06738 aims to address issues surrounding deficiency judgments in cases where properties have crumbling foundations, specifically those affected by pyrrhotite. The bill introduces protections for mortgagors, preventing lenders from seeking deficiency judgments against them if the decrease in property value is due to the presence of failing residential foundations. This legislative action seeks to alleviate the financial burdens experienced by homeowners dealing with the costly repairs associated with such foundation issues.
One notable point of contention surrounding HB 06738 is its potential implications for mortgage lending practices. While the bill seeks to protect vulnerable homeowners, concerns may arise regarding how these changes could affect lenders' willingness to extend credit on new mortgage loans. The provision that penalizes lenders for denying mortgage credit based on previous defaults or foreclosures related to such foundation issues introduces a significant regulatory measure that could lead to differences in how financial institutions assess risk. Balancing homeowner protection with the interests of lenders will be crucial as this bill progresses through legislative discussions.