August 1, 2013
by Richard M. Leibert
Hunt Leibert, P.C. – USFN Member (Connecticut)
The regular session of Connecticut’s Legislature for 2013 ended at midnight on June 5, 2013. It was a very active session with many proposed bills. The following is a summary of Public Act 13-136 - An Act Concerning Homeowner Protection Rights. This bill changes Connecticut’s mediation program. The highlights are:
Eligibility for the mediation program is limited to: (1) owner-occupant; (2) 1-4 family residential real property; (3) who is a borrower under a mortgage encumbering the property; and (4) which is the primary residence of such owner-occupant, except an heir or occupying non-owner of a property encumbered by a reverse mortgage.
The objectives are to determine if the parties can reach agreement on either avoiding a foreclosure or expediting the process and reaching this determination with “reasonable speed” and efficiency by participating in the mediation “in good faith.”
Effective October 1, 2013, once the borrower files for mediation the borrower must receive from the servicer or its counsel by the 35th day after the return date:
1. 12-month account history with plain language explanation;
2. Forms to complete and list of documents to submit to evaluate the borrower for any foreclosure alternatives offered by the servicer;
3. Copy of note and mortgage;
4. Summary of any pending foreclosure avoidance efforts;
5. Copy of the executed Connecticut Loss Mitigation Affidavit used when foreclosure commenced;
6. At the servicer’s election a summary of prior foreclosure avoidance efforts, plus condition of the mortgage property, plus anything else the servicer deems relevant to meet the objective;
7. Contact information at the servicer as to who can answer questions of the mediator.
Before the first mediation after October 1, 2013, the borrower will meet with the mediator by the 49th day following the return date or approximately 2 weeks after receiving the package from the servicer.
At the meeting, the mediator will assist to ensure the forms are completed, documents gathered, and will “facilitate and confirm” that everything is submitted to the mortgagee. The borrower may meet multiple times with the mediator, who has until the 84th day following the return date to decide whether to hold mediation. The mediator must file a report at the end of the pre-mediation period indicating whether a mediation shall be scheduled, whether the borrower attended the scheduled meetings, whether the borrower fully or substantially completed the forms furnished by the servicer, the date on which the servicer supplied the forms, along with any other relevant information the mediator feels germane.
The servicer has 35 days to evaluate the borrower’s submitted package, which time period can be extended. Any additional information must be requested within a “reasonable period.” The goal is that the mediation will conclude seven months from the return date or at the end of the third mediation session. Mediations can be extended by the court upon written request.
Effective July 15, 2013, mediators must file a report after each session. The report will set forth each party’s obligation prior to the next mediation session and state whether the parties engaged in conduct to meet the objective. Parties can file a supplement to the mediator’s report within five business days of the mediator’s filing.
Ability to Mediate
The servicer’s mediation representative must be able to respond to questions and specify or estimate when a decision shall be made and must be reasonably familiar with the loan and loss mitigation options.
If the parties do not mediate in good faith, the court can terminate mediation, require the servicer to send a representative in person to the mediation, impose fines, and award attorneys’ fees to the borrower’s counsel.
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