Notice of Intent to Amend Regulations
In accordance with Section 4-168(a) of the 2008 Supplement to the General Statutes, and by the authority granted in Section 49-31j of the Connecticut General Statutes, notice is hereby given that the Banking Commissioner intends to amend regulations concerning protection from mortgage foreclosure.
Text of Proposed Regulations:
Section 1. Sections 49-31j-1 and 49-31j-2 of the Regulations of Connecticut State Agencies are amended to read as follows:
Sec. 49-31j-1. Definitions
[For purposes of these regulations, any word or phrase which is defined in P.A. 83-547 as amended by P.A. 83-29 of the June Special Session (hereinafter referred to as the “Act”) shall have that same meaning in these regulations, unless such word or phrase is specifically given a different meaning in these regulations.] As used in sections 49-31j-1 to 49-31j-5, inclusive, of the Regulations of Connecticut State Agencies:
(1) “Additional principal” means the sum added to the existing principal balance by the court pursuant to subsection (a) of section 49-31i of the Connecticut General Statutes;
(2) “Existing principal balance” means the principal balance of the mortgage debt due the lender as of the entry date of the court ordered restructuring of the mortgage debt;
(3) “Homeowner” means “homeowner” as defined in section 49-31d of the Connecticut General Statutes;
(4) “Lender” means “lender” as defined in section 49-31d of the Connecticut General Statutes;
(5) “Original mortgage interest rate” means the interest rate set forth in the mortgage note. If the mortgage note provides for a different rate of interest after default or after judgment, those provisions shall not apply; and
(6) “Prevailing interest rate” means the most recent “National Average Contract Mortgage Rate for the Purchase of Previously Occupied Homes by Combined Lenders” made available by the Federal Housing Finance Board not less than fifteen nor more than forty-five days prior to the entry of the court ordered restructuring of the mortgage debt.
[For purposes of these regulations, any word or phrase which is defined in P.A. 83-547 as amended by P.A. 83-29 of the June Special Session (hereinafter referred to as the “Act”) shall have that same meaning in these regulations, unless such word or phrase is specifically given a different meaning in these regulations.] As used in sections 49-31j-1 to 49-31j-5, inclusive, of the Regulations of Connecticut State Agencies:
(1) “Additional principal” means the sum added to the existing principal balance by the court pursuant to subsection (a) of section 49-31i of the Connecticut General Statutes;
(2) “Existing principal balance” means the principal balance of the mortgage debt due the lender as of the entry date of the court ordered restructuring of the mortgage debt;
(3) “Homeowner” means “homeowner” as defined in section 49-31d of the Connecticut General Statutes;
(4) “Lender” means “lender” as defined in section 49-31d of the Connecticut General Statutes;
(5) “Original mortgage interest rate” means the interest rate set forth in the mortgage note. If the mortgage note provides for a different rate of interest after default or after judgment, those provisions shall not apply; and
(6) “Prevailing interest rate” means the most recent “National Average Contract Mortgage Rate for the Purchase of Previously Occupied Homes by Combined Lenders” made available by the Federal Housing Finance Board not less than fifteen nor more than forty-five days prior to the entry of the court ordered restructuring of the mortgage debt.
Sec. 49-31j-2. Notice
Without limiting the [acceptability] sufficiency of other forms of notice, it shall be sufficient for a [Lender] lender to give notice to a [Homeowner] homeowner of the [possible] availability of the [relief] protection from foreclosure provisions of [the Act] sections 49-31d to 49-31i, inclusive, of the Connecticut General Statutes by inserting language [which] that reads substantially as follows in capital letters at the end of the foreclosure complaint immediately following the prayers for relief:
“Notice: A person who is [unemployed or under-employed] underemployed or unemployed and who has [(] for a continuous period of at least two years prior to the commencement of this foreclosure action [)] owned and occupied the property being foreclosed as such person’s principal residence, may be entitled to certain relief provisions under [Connecticut Public Act 83-547, as amended by Public Act 83-29 of the June special session] sections 49-31d to 49–31i, inclusive, of the Connecticut General Statutes. You should consult an attorney to determine your rights under this [act] sections 49-31d to 49-31i, inclusive, of the Connecticut General Statutes.”
Without limiting the [acceptability] sufficiency of other forms of notice, it shall be sufficient for a [Lender] lender to give notice to a [Homeowner] homeowner of the [possible] availability of the [relief] protection from foreclosure provisions of [the Act] sections 49-31d to 49-31i, inclusive, of the Connecticut General Statutes by inserting language [which] that reads substantially as follows in capital letters at the end of the foreclosure complaint immediately following the prayers for relief:
“Notice: A person who is [unemployed or under-employed] underemployed or unemployed and who has [(] for a continuous period of at least two years prior to the commencement of this foreclosure action [)] owned and occupied the property being foreclosed as such person’s principal residence, may be entitled to certain relief provisions under [Connecticut Public Act 83-547, as amended by Public Act 83-29 of the June special session] sections 49-31d to 49–31i, inclusive, of the Connecticut General Statutes. You should consult an attorney to determine your rights under this [act] sections 49-31d to 49-31i, inclusive, of the Connecticut General Statutes.”
Sec. 2. Section 49-31j-5 of the Regulations of Connecticut State Agencies is amended to read as follows:
Sec. 49-31j-5. Composite interest rate
[The court shall establish the Composite Interest Rate which shall apply to the Restructured Principal Debt at the end of the restructuring period.
(a) Definitions:
(1) The interest rate used to determine the interest in paragraph (a) (3) of Section 3 hereof with respect to interest during the restructuring period shall be the “Old Interest Rate.”
(2) “Prevailing Interest Rate” shall mean the “Contract Interest Rate, Purchase of Previously Occupied Homes, National Average for All Major Types of Lenders” as made available by the Federal Home Loan Bank Board. The rate used shall be the most recent rate made available by the Federal Home Loan Bank Board not less than 15 nor more than 45 days prior to the entry of the restructuring order.
(3) The amount referred to in paragraph (a) (1) of Section 3 hereof is referred to herein as the Old Principal.
(4) The sum of the amounts referred to in paragraphs (a) (2) through (a) (7) inclusive of Section 3, less the amount referred to in paragraph (b) of Section 3 is referred to herein as the New Principal.
(b)] The [Composite Interest Rate] composite interest rate for the new mortgage debt shall be a combination of the [Old Interest Rate and the Prevailing Interest Rate. The Composite Interest Rate] original mortgage interest rate and the prevailing interest rate and shall be calculated as follows:
(1) The [Old Interest Rate] original mortgage interest rate shall be multiplied by a fraction, the numerator of which shall be the [Old Principal] existing principal balance and the denominator of which shall be the [Old Principal] existing principal balance plus the [New Principal] additional principal.
(2) The [Prevailing Interest Rate] prevailing interest rate shall be multiplied by a fraction, the numerator of which shall be the [New Principal] additional principal and the denominator of which shall be the [Old Principal] existing principal balance plus the [New Principal] additional principal.
(3) The sum of [paragraphs] subdivisions (1) and (2) of this section, rounded to the nearest one-eighth of one [percent] per cent, shall be the [Composite Interest Rate] composite interest rate.
[The court shall establish the Composite Interest Rate which shall apply to the Restructured Principal Debt at the end of the restructuring period.
(a) Definitions:
(1) The interest rate used to determine the interest in paragraph (a) (3) of Section 3 hereof with respect to interest during the restructuring period shall be the “Old Interest Rate.”
(2) “Prevailing Interest Rate” shall mean the “Contract Interest Rate, Purchase of Previously Occupied Homes, National Average for All Major Types of Lenders” as made available by the Federal Home Loan Bank Board. The rate used shall be the most recent rate made available by the Federal Home Loan Bank Board not less than 15 nor more than 45 days prior to the entry of the restructuring order.
(3) The amount referred to in paragraph (a) (1) of Section 3 hereof is referred to herein as the Old Principal.
(4) The sum of the amounts referred to in paragraphs (a) (2) through (a) (7) inclusive of Section 3, less the amount referred to in paragraph (b) of Section 3 is referred to herein as the New Principal.
(b)] The [Composite Interest Rate] composite interest rate for the new mortgage debt shall be a combination of the [Old Interest Rate and the Prevailing Interest Rate. The Composite Interest Rate] original mortgage interest rate and the prevailing interest rate and shall be calculated as follows:
(1) The [Old Interest Rate] original mortgage interest rate shall be multiplied by a fraction, the numerator of which shall be the [Old Principal] existing principal balance and the denominator of which shall be the [Old Principal] existing principal balance plus the [New Principal] additional principal.
(2) The [Prevailing Interest Rate] prevailing interest rate shall be multiplied by a fraction, the numerator of which shall be the [New Principal] additional principal and the denominator of which shall be the [Old Principal] existing principal balance plus the [New Principal] additional principal.
(3) The sum of [paragraphs] subdivisions (1) and (2) of this section, rounded to the nearest one-eighth of one [percent] per cent, shall be the [Composite Interest Rate] composite interest rate.
Sec. 3. Sections 49-31j-3 and 49-31j-4 and 49-31j-6 to 49-31j-9, inclusive, of the Regulations of Connecticut State Agencies are repealed.
Statement of Purpose: To replace references to public acts with statutory cites; revise the form lenders may use to give notice pursuant to Sections 49-31e and 49-31j of the Connecticut General Statutes, to a homeowner of the availability of the provisions of Sections 49-31d to 49-31i, inclusive; place definitions at the beginning of the provisions concerning protection from mortgage foreclosure; eliminate paraphrasing provisions already in the Connecticut General Statutes and Regulations of Connecticut State Agencies that exceed the scope of the authorizing statute; and make other technical changes to the provisions of the regulations concerning protection from mortgage foreclosure.
All interested persons who wish to submit data, views or arguments and to inspect and copy the fiscal note prepared in connection with the proposed regulations may do so in writing within thirty (30) days of the publication of this notice in the Connecticut Law Journal. Comments may be submitted to the Banking Commissioner, Attention: Legal Division, Department of Banking, 260 Constitution Plaza, Hartford, Connecticut 06103-1800.