A Connecticut bill that would extend a foreclosure mediation program through 2014 passed through the Connecticut legislature’s banks committee, but faces a fight in the wider legislature, according to an article by Kenneth Gosselin in the Hartford Courant.
The mediation program was begun in 2008 in response to the foreclosure crisis that has battered the country’s housing markets. Under the new bill, the program stops lenders from foreclosing unless the delinquent homeowner is informed of their right to pursue mediation. If the mediation process has been started, the bill also prohibits lenders from moving forward with foreclosure until the mediation process is finished.
According to the article from the Courant, the bill is running into opposition from banking interests, which say that the bill could cause the foreclosure process to be drawn out unnecessarily. As of last December, Connecticut had one of the lengthier foreclosure processes in the country, with the average foreclosure taking 283 days (the longest foreclosure time was in Massachusetts, at 373 days).
Foreclosures are down for seven straight months on a year-over-year basis, but this is more likely a result of slowed or suspended foreclosure processes because of the robo-signing crisis than the result of improving economic conditions. The foreclosure mediation program has been successful in reaching an agreement about 75% of the time, in 6,086 of 8,080 cases that went to mediation. As of yet there are no figures that show how many of the modified loans go back into foreclosure.
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