Connecticut Gov. Calls for Six Month Foreclosure Moratorium
Add Connecticut governor M. Jodi Rell to the list of state and local officials determined to "do something" about the bad decisions made by borrowers and lenders during the nation's housing boom. Last week, her office announced that it was seeking legislation that would institute an immediate six-month moratorium on all foreclosures, as well as implementing a mandatory 60-day mediation period on all contested foreclosures going forward. The proposals are part of a broad plan her office said will "safeguard both homeowners and renters amid one of the biggest housing crises in recent history." But it's worth noting that Rell isn't expecting local government to share in the cost burdens associated with a moratorium: borrowers would need to continue to pay interest and property taxes during the proposed moratorium, her office said. (Likewise, there was no word on whether the mandatory 60-day mediation period being proposed would extend to tax liens, as well). Some of the more common-sense ideas coming from Rell's office, however, involve renters: owners of properties with five or fewer rental units would be required to notify tenants within seven days of receiving a notice of foreclosure or filing for protection from creditors under bankruptcy laws, under her proposal. An increasing number of renters are coming home to find a foreclosure sign in front of their duplex or small apartment building -- the first indication any of them have had that the place where they live is in any kind of jeopardy. In the meantime, the landlord has been skimming their rent payments. The issue of rent skimming became national news when Cook County, Ill. sheriff Tom Dart suspended all evictions over the issue on Oct. 10. (The current issue of HousingWire Magazine tackles rent skimming troubles, as well. Click here to learn more.) “These are common-sense protections and precautions that will help Connecticut residents hang on to the single greatest asset most of us will ever have -- our homes,” Rell said. “They will also ensure that renters are not inadvertently caught up in a financial whirlwind over which they have no control at all." “Connecticut has so far been relatively fortunate – we have not seen the disastrous decline in real estate prices the communities in places like New York and California have faced,” Governor Rell said. “But we will take no chances." The state also has already drafted a plan to use its allocation of $4 billion in state-level funding under the Housing and Economic Recovery Act of 2008. Under the current proposal, much of the federal money will go to the state’s largest municipalities -- Hartford, New Haven, Waterbury, Bridgeport, Meriden and New Britain -- while about $2.1 million is being made available to assist smaller communities, including many hard-hit towns in eastern Connecticut. Write to Paul Jackson at email@example.com.