From the Capitol / Sen. Bob Duff
Keep foreclosure mediation in place
Since 2008, Connecticut's foreclosure mediation program has kept 3,386 borrowers in their homes by helping them negotiate new loan terms or other agreements. The highly successful program, however, is scheduled to end this year.
Many of us in state government believe that this program is worth its small price tag, which is why my committee -- the General Assembly's Banks Committee -- other lawmakers, and the governor's office are all committed to keeping the mediation program running.
Connecticut's foreclosure mediation program is operated through the state's Judicial Branch and has become a national model for coping with the subprime mortgage and home foreclosure crisis in our country. It is widely credited with supporting homeowners as they work with lenders in good faith to try to resolve their financial troubles.
When originally created, the program was to be offered on a voluntary basis for two years. However, the legislature decided to make the program mandatory after the Judicial Branch reported significant success through mediation.
The process is straightforward. When homeowners are served foreclosure papers, they're given the mediation forms, which are in simple language and easy to understand, on the top of the stack. Borrowers, who usually cannot afford an attorney, attend a session with their lender, who usually does have at least one attorney, and a court-appointed mediator, one of several trained and employed at courthouses around the state.
Working together, the lender, the homeowner and the mediator look to find a way to resolve the foreclosure. Sometimes it's a loan modification, sometimes it's another agreement that keeps them in their home, sometimes it's a short sale and sometimes an agreement unfortunately cannot be reached.
Consistently, though, 70 percent of those who go through the mediation program reach an agreement with their lender that allows them to stay in their home.
Foreclosure is bad for individuals and for families, but it also has serious detrimental effects on our neighborhoods and our state economy. Foreclosure brings down neighboring property values and leads to blight, vandalism and crime. It also ends up costing the state more, as the need for assistance and social programs rises when families are displaced.
It's in our best interests as a state to work out agreements that keep homeowners in their homes as much as possible, and foreclosure mediation does just that.
Recently, we extended the program for one more year. There are few places in government where we get such a strong return on such a relatively small investment. I believe we should keep this going as long as the economic times warrant it.