The Banks Committee heard testimony on two bills Thursday that would extend the state’s foreclosure mediation program beyond its current expiration date of June 30. One bill would extend the program by a year while the other would make the program permanent.
The program, which was adopted with bipartisan support, requires lenders to enter court-supervised mediation with a homeowner before foreclosing on that person’s home. The intent is to reduce the number of foreclosures and any further depreciation in home values.
Banking Commissioner Howard Pitkin said that he was in support of the first bill which would only extend the program to June 30, 2011. But Pitkin added, “Rather than come back and revisit the program next year, I think a two year renewal should be granted.” Foreclosures, he said, would continue to be a problem for at least that long.
His reasoning was in part based on the success of the program thus far, but also that mortgage modifications take time and cooperation. “A lot of work is going on to bring people to a resolution with their mortgages.”
David Wiese, an attorney speaking on behalf of the Connecticut Bankers Association, said the banks represented by CBA are in support of extending the program an additional year. “Unfortunately the emergency is not over. We still have a lot of foreclosures on the docket.”
But, Wiese said, CBA is not in favor of making the program permanent as the second bill would do. Nor is CBA in favor of the second bill’s requirement that lenders bring specific documents to every mediation session. Those documents may not not be relevant to every foreclosure case. “To bring these things to every single mediation we think is counterproductive,” Wiese said.
As of Feb. 28, there have been 13,823 successful foreclosure mediations through the program. This represents almost a third of all 43,556 foreclosure cases in the state since the program was adopted in 2008. Not all foreclosure cases were eligible for mediation through the program.