Governor Rell Signs Landmark Subprime Mortgage Assistance Bill
Governor Says Bill Sets National Model for Helping
Homeowners, Preserving State’s Economic Foundation
This news release was issued by the Governor's Office
June 18, 2008
Governor M. Jodi Rell today signed into law a landmark bill that funds three programs to help struggling homeowners cope with the mortgage credit crunch and imposes reforms on the mortgage industry to avoid future problems.
“This bill sets a new national standard for efforts to help homeowners caught up in the whirlwind of the subprime mortgage crisis and a national economic decline,” Governor Rell said at the signing ceremony at a Rockville Bank branch in Manchester. “Connecticut residents are feeling the pressure from all sides – from staggering gas prices, rising prices for all forms of energy, food prices and the overall cost of living – and many middle-class families are having trouble making their mortgage. We are here to help – and with this legislation, we will.
“The mortgage credit crunch and the economic slump are national problems – but they are affecting Connecticut neighborhoods and we are not standing idly by,” the Governor said. “We will not allow the ‘American Dream’ of home ownership to wither or allow this problem to further drag down our state’s economic outlook. I was proud to craft this bill with our partners in the Legislature and I believe it will serve as a model for other states looking to help their residents hang on to their most important investments.”
Governor Rell thanked the Banks Committee co-chairs, state Sen. Bob Duff (D-25) and state Rep. Ryan Barry (D-12), and ranking members, state Sen. Rob Kane (R-32) and state Rep. John Ryan (R-141), and Department of Banking Commissioner Howard Pitkin, who worked with her Administration to develop the comprehensive proposal.
Shortly after the credit crunch erupted last year, Governor Rell announced the CT FAMLIES program, a $50 million financing program administered by the Connecticut Housing Finance Authority (CHFA). The program was enhanced in February when the Governor announced it would allow homeowners who purchased properties with a sub-prime adjustable rate mortgage and subsequently refinanced into another adjustable rate product to be eligible, offer the same interest rate (6.00 percent) as the prevailing CHFA homebuyer mortgage rate and add new lenders to originate CT FAMLIES mortgages.
The new legislation directs $40 million to continue the CT FAMLIES program while boosting the existing Emergency Mortgage Assistance Program with an additional $70 million and creating a new, $30 million Homeowners Equity Recovery Opportunity program. Most of the money for these programs is coming from existing bond funds.
“That is not all, however,” Governor Rell said. “We recognize that there have been structural problems that contributed to the mortgage crisis. Those problems have to be addressed, or all we are doing is a temporary fix.”
The bill establishes foreclosure mediation programs to be conducted through the Judicial Branch, puts new regulations in place on the mortgage industry – including a ban on prepayment penalties – and expands the authority of the Department of Banking. It also sets up a training team within the CTWorks Career Centers to help eligible borrowers with overdue loans to find good jobs and get back on financial track.
“State government has two jobs in this current economic environment,” Governor Rell said. “First, we must be sure the state controls its spending and avoids large budget deficits. Second, and just as important, we have to make sure Connecticut is ready right out of the starting gate when the economy picks up again. A stable housing market – and a quality work force with good homes in good neighborhoods – is vital to that success.”