HARTFORD- In order to ensure meaningful regulation of the mortgage loan industry and prevent abusive lending practices, Greenwich Reps. Fred Camillo, Livvy Floren and Lile Gibbons and the rest of the General Assembly passed a new law this legislative session to provide additional protections for borrowers.
“The mediation program has been very successful. During the last year, 70% of the participants in the program have been able to remain in their homes,” said Rep. Gibbons.
The legislation creates the crime of residential mortgage fraud. It provides that a person who commits a single act of residential mortgage fraud is guilty of a class D felony (up to a $ 5,000 fine, up to five years in prison, or both), while a person who commits two or more acts is guilty of a class C felony (up to a $ 10,000 fine, up to 10 years in prison, or both).Rep. Camillo said, “Home ownership is the single biggest investment for the overwhelming majority of people in the country. Any measures that provide protections for these homeowners are certainly a worthwhile endeavor.”
The bill also expands the Foreclosure Mediation program created by the legislature in 2008 by making it mandatory. “The main problem is that the participation rate has been very low. Only 30% of those eligible for the program have entered it. As a result, the legislature makes the mediation program mandatory for all those in foreclosures,” said Rep. Floren.
The legislation also modifies the interest rate that makes a home loan “nonprime”; extends, by one year, the banking commissioner’s authority to adjust interest rate parameters for nonprime loans; allows the commissioner to deem certain mortgage professional license applications abandoned and keep the application fee; applies an existing prohibition against increasing the interest rate after default in certain loans to all residential mortgage loans; and makes minor and technical changes.
The effective date for the legislation is October 1, 2009.