Banking Committee
JOINT FAVORABLE REPORT
Bill No.: SB-891
AN ACT CONCERNING THE EZEQUIEL SANTIAGO FORECLOSURE
Title: MEDIATION PROGRAM AND OTHER ALTERNATIVES TO FORECLOSURE.
Vote Date: 3/17/2021
Vote Action: Joint Favorable Substitute
PH Date: 3/2/2021
File No.: 248
Disclaimer: The following JOINT FAVORABLE Report is prepared for the benefit of the
members of the General Assembly, solely for purposes of information, summarization and
explanation and does not represent the intent of the General Assembly or either chamber
thereof for any purpose.
SPONSORS OF BILL:
Banking Committee
REASONS FOR BILL:
Mortgage Foreclosure, especially in the days of Covid-19 and following, is one of the most timely and
critical problems that will be facing residents and banks. It was important that we make permanent
the program in place that was scheduled to sunset and attempt to protect the people of CT as best we
can.
RESPONSE FROM ADMINISTRATION/AGENCY:
Judicial Branch External Affairs Division
They urge 2 actions be considered. First, that the requirement contained in subsection (j) of Section 2
that the Chief Court Administrator prepare and submit a statistical report about the program to the
General Assembly be eliminated. The second action pertains to funding for the program, which is
currently supported by the Banking Fund. Beginning on June 30, 2023, the funding for this program
will run out because the program is currently scheduled to sunset. Funding to continue this program
would need to be appropriated to the Judicial Branchs budget beginning in FY 24. We wanted to
bring a discrepancy within the bill to the Committees attention. Section 5 (d) of the bill indicates that
the emergency mortgage assistance program (EMAP) loan is secured by a second mortgage on the
homeowner's property. However, Section 1 (12) defines lien as a mortgage deed or other instrument
that constitutes a first or second consensual lien . . . . If the homeowner is applying for an emergency
mortgage assistance loan because the second lienor is foreclosing, the EMAP loan could not be a
second lien on the property, unless the second lienor is willing to subordinate, which is unlikely.
NATURE AND SOURCES OF SUPPORT:
Bruce Adams, President & CEO Credit Union League of CT Support
Credit unions are not-for-profit financial cooperatives owned by and existing only to serve their
members. The unique structure of credit unions provides important context for our position on this
issue. This program, although admirable, has had unintended consequences for credit unions. The
program has lengthened the processes already used by credit unions as they diligently work to help
their members remain in their homes. Unfortunately, the process has also resulted in raised costs that
are then directly or indirectly absorbed by the other members of the credit union. This program caused
adverse effects on Connecticuts credit unions and the everyday consumers who are their member
owners. Credit unions already work to place their members first in all that they do. We would support
a legislative study to determine the appropriateness of whether to make the program permanent and if
itis necessary, the study should also determine the proper source of funding.
Jeff Gentes Connecticut Fair Housing Center and the Housing Clinic at Yale Law School -
Support
Likes that this would eliminate the "unnecessary" sunset date from a program that has served CT well
for thirteen years. Sec. 6 would close the gap in mortgage workouts for homeowners; without it, we
could be facing hundreds of otherwise preventable foreclosures. This bill would also address another
gap in the market the lack of programs for people facing condo, tax, or sewer foreclosures but who
lack a mortgage. We suggest an improvement that would use the existing EMAP structure, provide
administrative support to CHFA, and could facilitate CHFAs use of expected federal funding for
homeowners.
Tom Mongellow, Art Corey CT Bankers Association Support
House Bill 6493 - Support with changes
This bill would add another valuable feature to CHFAs existing Emergency Mortgage Assistance
Program (EMAP) It also adds to the program a loan guarantee component similar to the Crumbling
Foundation Loan Program, which this Committee, CHFA, CFSIC, and the banking industry developed,
and the legislature enacted in 2018.
That program is a good example of how public-private partnerships can enhance and leverage limited
state dollars, by using bank dollars for the loans. The CBA has long encouraged this concept for the
EMAP program since it would take the programs limited dollars and leverage them by up to five
times, depending on the programs default rate.
Raphael Pololsky CT Legal Services -
Making the FMP permanent is long overdue. They are also in support of the part of the bill that
addresses the immediate crisis resulting from the pandemic. Requiring the lenders, until July 2023 to
provide homeowners at risk of foreclosure whose mortgages are not backed by Fannie Mae with
substantially the same options for forbearance and loan modification that are required for
homeowners with Fannie Mae backed mortgages.
NATURE AND SOURCES OF OPPOSITION:
Nandini Natarajan CEO Exec Director CHFA- oppose
They have concerns about the committee acting upon this at this time. Congress is currently working
on the passage of a nearly $2 trillion-dollar stimulus package. Included within that legislation is almost
$10 billion in assistance to help homeowners avoid foreclosure. Each state is scheduled to receive at
least $40 million, which will be eligible to be used for mortgage payments, property taxes, utilities, etc.
With that money potentially coming to Connecticut over the next few months, we question the
necessity of establishing a new state-funded program currently. Also, given that there is a strong
possibility that CHFA will be involved in the distribution of any federal homeowner assistance dollars,
we would argue that our resources might be better spent on those distribution efforts, rather than on
setting up the new program proposed under this bill. Because we already have the EMAP program,
we are concerned about the potential of this new program to create confusion among homeowners in
distress.
Page 2 of 3 SB-891
Connecticut REALTORS - Opposed
The mediation program was always meant to sunset, and it should. Recurring delays and no
restrictions on repeated participation within the program can add significant time, even years, to
foreclosure proceedings. Providing resources at the initial time of potential foreclosure is significantly
more impactful to property owners than having a process delayed by many years without any
identifiable solutions. This mediation process causes Connecticut to be one of the slowest foreclosure
states in the country. This additional time has often resulted in many negative and unintended
consequences including, blighted and abandoned property, delinquent real estate taxes, and
depressed property values for homes surrounding the foreclosure.
Anthony Joyce - Chelsea Groton Bank opposed
This was meant to sunset. Parties agreed to a 4-year extension. In 2019 this Committee and the
legislature extended the sunset date until 2023. At that time, the banking industry agreed to a 4-year
extension under the presumption that all stakeholders would, at the end of that period, assess
whether the program should continue or end, as has been done in the past. "It comes as a surprise
less than two years later that this bill has been proposed to make the program permanent. Between
the short time that has elapsed since 2019 and the almost nonexistent foreclosure activity during the
pandemic, there is little information or data to gauge how the foreclosure program is working. As a
result, we dont think this is the right time to make the program permanent." In their experience,
Foreclosure and rarely occurs until after a long period of time, sometimes up to a year, of working with
homeowners experiencing financial difficulties.
"We urge you to allow the foreclosure mediation program to continue to work, without out any
changes and in an orderly fashion, through the existing sunset date of June 30, 2023. We would
welcome a detailed discussion on how to proceed with the program as it nears its sunset date.
In addition, we are very concerned about and strongly oppose Section 6 of the bill. This section
would mandate that bank-owned mortgages have the same forbearance and other relief options
as federally related mortgage loans."
Reported by: Dawn Marzik Date: 3/26/2021
Page 3 of 3 SB-891


Statutes affected:
Raised Bill: 49-31l, 49-31n, 49-31v
BA Joint Favorable Substitute: 49-31l, 49-31n, 49-31v, 8-265cc, 8-265dd, 8-265ee, 8-265ff, 8-265gg, 8-265hh, 8-265ii, 8-265kk
File No. 248: 49-31l, 49-31n, 49-31v, 8-265cc, 8-265dd, 8-265ee, 8-265ff, 8-265gg, 8-265hh, 8-265ii, 8-265kk
Public Act No. 21-44: 49-31l, 49-31n, 49-31v, 8-265cc, 8-265dd, 8-265ee, 8-265ff, 8-265gg, 8-265hh, 8-265ii, 8-265kk