Sen. Bob Duff, D-Norwalk, and Attorney General Richard Blumenthal held a press conference Thursday in hopes of spreading the word about a bill which aims to regulate and monitor for-profit and nonprofit debt negotiation companies, including “foreclosure rescue” companies.
The bill passed unanimously through both the Senate and House during the legislative session and is currently awaiting Gov. M. Jodi Rell’s signature.
Duff and Blumenthal urged Rell to sign the bill even though they had no indications that she wouldn’t.
“We live, tragically, in an era of false promises,” Blumenthal said.
He went on to explain that many debt negotiators prey on unsuspecting homeowners by offering false promises. They lead unsuspecting people to believe their debt will disappear with the help of these companies.
According to Blumenthal these companies often talk people into signing over ownership of their homes only to strip them of their equity later on. He further explained that some of these companies will send their people to courtrooms during foreclosure hearings to offer their “scams” to the distraught defendants at the end of the trial.
“Nothing is more pernicious than exploiting someone who is about to loose their home,” he said.
The bill, if signed by Rell, will require debt negotiation companies to register with the state Department of Banking, pay a license fee and post a security bond.
The goal of the bill is to eliminate all up-front fees for consumers, provide greater monitoring over these companies and send a message to “bottom feeders” looking to exploit homeowners who may not understand what they are getting into.
Duff and Blumenthal hope this legislation will provide a model for other states to take similar action in regulating the highly lucrative foreclosure market.
Blumenthal is currently investigating a number of suspect cases involving debt negotiating companies, which include allegations of forged papers, kickbacks and failure of foreclosure notices to be properly delivered to homeowners.