State Looks at Foreclosure Crisis
by Christine Stuart | February 13, 2008 9:05 PM
Posted to General News
The foreclosure crisis has made national headlines, but the federal government has “failed in its obligation to address this crisis,” Attorney General Richard Blumenthal said Wednesday. And this is why a number of proposals to address the increase in mortgage foreclosures, subprime loans, and predatory lending practices will be addressed at the state level this year.
Senator Martin Looney, a Democrat from New Haven, said the number of adjustable rate mortgages and related foreclosures will increase over time because a number of adjustable rate loans were taken out in 2006 and 2007.
According to the Connecticut Fair Housing Center, there were 7,747 foreclosure filings in the third quarter of 2007, which represents a 920 percent increase over the third quarter of 2006. Almost 90 percent of the subprime loans in Connecticut are adjustable rate mortgages. These subprime loans accounted for 7 out of 10 foreclosures in 2007.
The significant spike in foreclosures is “why the we need to take action at the state level,” Looney said.
Gov. M. Jodi Rell’s “CT Families” $50 million refinancing program for borrowers with a subprime loan is too restrictive, Blumenthal said Wednesday. He said since the program was started in November 2007 it has only helped 25 families. He said the problem with the program is that in order to refinance the homeowner can’t have any credit problems, which is unreasonable for almost anyone in this situation.
Blumenthal said he will propose something like what the federal government did during the Great Depression. He said back then the government bought mortgages in default at steep discounts and then helped homeowners refinance them so they could stay in their homes.
Some of the proposed legislation includes bans on certain loan terms that greatly increase default, such as prepayment penalties and balloon payments. There’s also a proposal to make escrow of property taxes and homeowner’s insurance mandatory.
Click hereto read a number of stories from individuals caught up in the crisis and the story of one family who narrowly escaped an adjustable rate mortgage.
Comments (2)
Posted by: Real Estate Foreclosures | February 24, 2008 7:20 AM
I wonder if the states are really going through a crisi right now...
Posted by: Margaret Brown | March 11, 2008 12:56 PM
My house is in foreclosure because I went through a bad divorce and I cannot get my hands on my funds. I have an adjustable rate mortgate and the bank has
ignored the payments that I made for 14 years so that my final loan obligation is merely less than $10,000 from the original amount owed. The bank only acknowledged my last lump sum payment of a little over $50,000.
Because I had no lawyer and could not access my funds, the bank might get away with ignoring my downpayment on the house as well as other payments made for previous years.
I believe there is a need for legal representation in some of these foreclosure matters where a person has been left bereft of her funds and is forced into a foreclosure and is left to the mercy of the bank's dishonest conduct.
There needs to be an improved initiative in providing legal assistance to homeowners in trouble. If homeowners had surperflous monies, homeowners would not sink into foreclosure.
Homeowners should get legal assistance from people who are already lawyers and not from people who don't even know legal terminology.
When I attempted to obtain legal assistance from someone who was supposed to be providing legal assistance, the nice young man did not understand the legal terminology that I used!!
Lack of legal assistance from knowledgeable lawyers is a real problem in the foreclosure crisis in Connecticut.
Homeowners who run into foreclosure problems mostly do not have legal representation as can be seen in the court on a day when the foreclosure calendar is called.
In addition, there are Federal Laws that can assist homeowners in suspending payments. Those laws are not sufficiently coded in the Connecticut regulations and banks sidestep apprising homeowners of this information.
It seems that
banks are given the leeway to force homeowners out of their homes without legal assistance hence adequate knowledge about legislation that Congress enacted to assist debtors. Banks are required to provide information orally and in writing about these laws but many fail to apprise the homeowners experiencing difficulties and are in the throes of losing their homes.
Thanks.