Banks Committee Chairman William Tong (D-Stamford, New Canaan) led the House of Representatives’ passage Thursday of legislation that offers homeowners facing foreclosure the opportunity to have court proceedings held in abeyance while they seek mediation.
In essence, the bill (HB 6351) gives homeowners an opportunity to participate in the foreclosure mediation program without simultaneously engaging in litigation for up to eight months.
“After the financial crisis of 2008, our housing market is recovering slowly and many homeowners still find themselves in difficult situations and sometimes regrettably they wind up in foreclosure,” Rep. Tong said.
“This legislation enhances what is already a national model for helping people with foreclosure and not to burden them with the extra demands of litigation while they try to work it out with banks,” Tong said.
In response to the national foreclosure crisis, the General Assembly took action in 2008 to protect and assist homeowners by establishing a Foreclosure Mediation Program. The new legislation extends the program to June 30, 2014. The program assists lenders and homeowners in negotiating a mutually agreeable resolution of a mortgage foreclosure action through the mediation process. Since the program’s inception, over 9,000 cases have completed mediation and the program has achieved a 79 percent settlement rate.