HARTFORD, CT — A new program established to provide loans to homeowners after their crumbling foundations have been repaired is now available.
The Supplemental Collapsing Foundation Loan Program will supplement the direct aid homeowners can qualify for to repair their foundations.
Currently, the Connecticut Foundation Solutions Indemnity Company (CFSIC) covers concrete work only, and often homeowners still incur thousands in costs to replace things like heating, plumbing, decks, sheds, and landscaping that must be removed before a new foundation is poured.
“We created this loan program to fill the gap in necessary costs needed by families who are literally watching as the foundations of their homes crumble before their eyes,” Gov. Ned Lamont said in a statement.
The loan program is for homeowners who have already received assistance through the CFSIC, and can provide up to $75,000 in fixed-rate loans through an arrangement between the Connecticut Housing Finance Authority and two private banks — Liberty Bank and Webster Bank.
“This is a great example of collaboration between state government and the banking industry to come together to help our homeowners rebuild their homes, and continue on with their lives without having to fear that their prime asset will depreciate in value,” Department of Housing Commissioner and CHFA Board Chair Seila Mosquera-Bruno said in a statement. “The bond dollars administered by CFSIC, through DOH, is the first course of action to repair the affected foundations, while our new loan program will provide the gap-financing for all other repairs at a lower interest rate than the homeowners would see otherwise.”
The State Bond Commission recently released the latest $20 million infusion to provide the insurance program’s funding. The CFSIC is receiving its funding in $20 million increments, plus a $12 surcharge on home insurance policies purchased in the state.
Lamont spokesman David Bednarz said the loan program is backed by the state, but all of the funding comes from the participating banks rather than from state coffers.
A $20 million infusion from the State Bond Commission provides the loan program’s funding. The CFSIC is receiving its funding in $20 million increments also from the state Bond Commission, plus a $12 surcharge on home insurance policies purchased in the state.
State estimates say the number of homes in Connecticut whose foundations include the mineral pyrrhotite could be up to 35,000, largely clustered in the northeastern portion of the state. The funding it would take to fix all foundations that eventually fail is unknown, but the total funding approved so far of up to $125 million is expected to be just a fraction of what will eventually be needed.
“We remain committed to working with our federal partners to address the repercussions of this natural disaster so that these homeowners can get some help rebuilding their homes and their lives,” Lamont said.
Each home repair takes about 8 weeks and an average of $200,000. The CFSIC has hundreds of approved applications waiting for funding, and so far has been able to provide payments immediately once it receives an infusion of state funding.
In an update posted to the CFSIC website Oct. 28, the insurer said foundation replacements at 50 homes have been completed since the first repairs began earlier this year. Work has only been approved so far for what the insurer has classified as the most severely failing foundations, the “Severity Class 3” homes.
It said there are 241 homes with funding in place ready for contracts between homeowners and contractors. Another 160 Class 3 homes have been approved but not funded because the insurer is “rationing cash” with up to a year between its installments from the state.
The possible “gap” costs not covered by the insurance funding as: repair or replacement of wall framing, drywall, paint and other wall finishes, porches or decks, gutters, landscaping, out-buildings or sheds and swimming pools.
“By having this below-market gap financing vehicle available, homeowners can achieve an affordable solution for the complete repair of their foundation and house. We sincerely appreciate the efforts of all the stakeholders to make this program a reality,” said Tom Mongellow, president and CEO of the Connecticut Bankers Association.
Change For Condo Owners
The CFSIC has announced a policy change in eligibility for condominium units, allowing commercial- or bank-owned buildings to be eligible for coverage. The change will go into effect on Nov. 26, expanding the opportunity for coverage beyond individual condo owners.
“It was the data that changed my board’s mind,” CFSIC superintendent Michael Maglaras said in a statement. “CFSIC is a company driven by information. Within the past two weeks, the data has made clear that we were not going to be able to help the people we would like to help… those condo owners who have been disadvantaged by this crisis through no fault of their own.”
Officials have made several changes over the last year that benefit condo owners, who were not eligible to have their foundations repaired when the programs were first enacted. During that time, the process has also been streamlined to allow condo association leaders to apply for coverage with a single application.
EDITOR’S NOTE: Story has been updated with additional background information to clarify that the state is backing the loans but the funds for the loan program are coming from participating banks.