by Donna Case-Rossato
McCalla Raymer Leibert Pierce, LLC
(USFN Member - AL, CA, CT, FL, GA, IL, MS, NJ, NV, NY, OR, TX, WA)

The 2021 Legislative Session in Connecticut has concluded and the major mortgage banking-oriented legislation that passed impacts the existing Foreclosure Mediation Program and Emergency Mortgage Assistance Program.

Foreclosure Mediation Program
During this session, the Legislature once again addressed the state’s Foreclosure Mediation Program via Public Act 21-44, formerly Substitute Senate Bill No. 891.  The following sections were amended:

1.       C.G.S. Sec. 49-31l(a):  Mediation sunset date was extended to July 1, 2029.

2.       C.G.S. Sec. 49-31l(d):  An additional requirement for a “federally backed loan” was approved wherein the following must be provided so the Mediator can include them in their pre-mediation report:

a.       The history of the mortgagee’s compliance with any obligation to notify the mortgagor of loss mitigation or foreclosure alterative options available for that loan type; and

b.       The history of foreclosure avoidance efforts voluntarily undertaken by the mortgagee with respect to the mortgagor.

There has not been any guidance as what will satisfy the history of any obligation to notify or history of voluntary foreclosure avoidance efforts.  While loss mitigation history has been an optional inclusion in the past, it is one where details and documents have been infrequently provided.  Now that it is required, there will be a needle to thread for servicers and their counsel between providing sufficient information to satisfy the statutory requirement and not disclosing the mortgagor’s non-public financial information, as it is not clear how public the mediators will make this information through their public-record reports.

3.       C.G.S. Sec 49-31n(b):  The mediator now has the ability to conduct the mediation session on a virtual platform or grant a request for same, versus in-person appearances as previously required by statute.   It is anticipated that this will be widely granted due to the ease and efficiency of a remote hearing.

4.       C.G.S. Sec. 49-31n(b)(4)(I):  The history required to comply with Sec. 49-31i(d) for federally backed loans and included in the pre-mediation report will also be required to be included in the Mediator’s Reports.

Emergency Mortgage Assistance Program (“EMAP”)
Surprisingly, this act also amended certain sections of C.G.S. Sec. 8-265cc to 8-265kk, governing the Emergency Mortgage Assistance Program (“EMAP”) and notices required under that act. In what appears to be an attempt to ensure additional rights for surviving spouses, certain definitional sections were changed.  Specifically, throughout the statutes governing EMAP, the term “homeowner” is now being used versus “mortgagor.”  The definition of “mortgagor” was changed to “a homeowner who is also the borrower under a mortgage encumbering such real property.”  “Homeowner “is defined as the owner-occupant of residential real property. 

Most important is the addition of reverse mortgages and HECMS to this section.  Specifically, “Mortgage” was amended to include a reverse mortgage or home equity conversion mortgage on residential real property. 

Another change is the impact on the EMAP letter itself.  Under C.G.S. Sec. 8-265ee, as amended, the EMAP letter must now be sent to “each homeowner who is a mortgagor”.  Recall that a “homeowner” is the owner-occupant of residential real property.

The legislation has been signed by the Governor and these changes are effective October 1, 2021.

A link to the full text of the act:  https://www.cga.ct.gov/2021/ACT/PA/PDF/2021PA-00044-R00SB-00891-PA.PDF

Overall, this legislative session saw more things introduced and not emerge from committee (or emerge only to die on the floor of the General Assembly) than passed legislation that impacts our industry.

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Summer 2021 USFN Report