Rell Proposes Moratorium On Residential Foreclosures
KENNETH R. GOSSELIN
November 21, 2008
With Connecticut apparently headed toward a deeper recession than first thought, Gov. M. Jodi Rell is proposing a six-month moratorium on all residential foreclosures, as well as protection for some tenants whose landlords are in foreclosure.
The proposals require legislative approval, and it's unclear whether they will be considered in a special session Monday, when the lawmakers plan to tackle the state's budget deficit.
"The governor would love to have it taken up as soon as possible," Rell spokesman Rich Harris said Thursday. "If not in the special session, then it will be at the top of her agenda in January."
The proposals are part of what Rell said is a three-point legislative plan to protect homeowners and renters caught in the state's housing downturn. It also includes $25 million in federal aid to cities and towns that will be used to buy, fix up and sell foreclosed properties.
The details of the moratorium — an idea that also surfaced in the last legislative session — still need to be worked out, but borrowers would be required to continue paying interest and taxes each month.
As part of her plan, Rell wants to expand the state's new foreclosure mediation program and make participation mandatory when borrowers are fighting to stay in their homes. Currently, borrower participation is voluntary.
A moratorium could blunt the impact of adjustable-rate mortgages that are resetting to higher rates just as unemployment in the state is expected to accelerate.
Rell's proposal to protect renters would require owners of properties with five or fewer apartments to notify tenants within seven days of a foreclosure or bankruptcy filing.
"These are common-sense protections and precautions that will help Connecticut residents hang on to the greatest single asset most of us will ever have — our homes," Rell said. "They will also ensure that renters are not inadvertently caught up in a financial whirlwind over which they have no control."
Foreclosures in Connecticut are not rising as rapidly as elsewhere in the country. But the state saw the number of filings increase by nearly 18 percent in the third quarter, compared with the same quarter a year ago, according to The Warren Group, a Boston-based real estate analyst.
Harris said the proposals for protecting renters were prompted by news stories about tenants in good standing being evicted because of their landlords' foreclosure, including a case in Hartford that has been taken up by Greater Hartford Legal Aid.
"It's a step in the right direction, but it's a small step," said David Pels, a staff attorney at Legal Aid.
Raphael Podolsky, a housing advocate at the Legal Assistance Resource Center of Connecticut in Hartford, said Connecticut law does not adequately protect tenants in landlord foreclosure proceedings. Typically, lenders who foreclose on properties would rather have them empty because they are easier to sell and free them of responsibilities to tenants.
"The policy of the state ought to be to discourage lenders from emptying buildings after foreclosure," Podolsky said.
Reprinted with permission of the Hartford Courant.
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