Connecticut House Bill HB05423

Connecticut 2020 Regular Session

• Introduced: 3/3/20
• Refer: 3/3/20

Caption

An Act Prohibiting Certain Mortgage Lenders From Charging Certain Fees To Borrowers After Receiving A Payment To Reinstate A Mortgage.

Impact

The implications of HB 05423 are significant in terms of consumer protection laws related to mortgages. By preventing lenders from charging fees that are not disclosed upfront, the bill empowers borrowers and enhances their financial security when reinstating their mortgages. This change is intended to create a more transparent process for homeowners, particularly those who may be facing financial difficulties due to default. The impact on state laws is primarily in the realm of banking regulation, as it sets clear guidelines on lender conduct, aiming to foster accountability and fair treatment of borrowers.

Summary

House Bill 05423 focuses on the regulation of mortgage lenders and addresses the financial obligations placed on borrowers in cases of mortgage reinstatement. The bill aims to prohibit certain mortgage lenders from imposing additional fees on borrowers after they have made a payment to reinstate their mortgage. Specifically, it requires lenders to provide a reinstatement payment statement outlining the total amount owed and mandates that any fees not included in that statement must be waived by the lender. Furthermore, the bill establishes parameters around how and when lenders must provide these statements to ensure borrowers can reinstate their mortgages without incurring unforeseen costs.

Contention

While the bill is primarily designed to protect borrowers, there are notable points of contention surrounding it. Opponents may argue that the regulations could limit the flexibility of lenders in their operations, potentially leading to tighter credit conditions and less willingness to work with borrowers in default situations. Additionally, some stakeholders may raise concerns about the administrative burden placed on lenders to comply with the new requirements and whether they could lead to increased overhead costs that might ultimately be passed on to consumers in other ways. The balance between protecting borrowers and allowing lenders the freedom to operate effectively remains a key discussion point.