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Proposed Changes to Connecticut’s Foreclosure Mediation Program

Posted By USFN, Monday, March 11, 2013
Updated: Monday, November 30, 2015

March 11, 2013


by James A. Pocklington
Hunt Leibert – USFN Member (Connecticut)

On February 7, 2013, Governor’s Bill No. 6355 was referred to the Committee on Banks. Among other things, the bill proposes sweeping changes to how the foreclosure mediation program (FMP) operates, the degree of authority and responsibilities of the court’s mediation specialists, the parties permitted or required to participate, as well as changes to the eight-month litigation bar and good faith mediation requirements.

Under current practice, the court’s mediation specialists file a report after the first and last mediation session. The bill proposes to require a report after each session, which becomes part of the public record. More significantly, it proposes that the court shall conduct hearings after each mediation session beyond the third one, inquiring as to the status of the case and “the reasons for which a resolution has not yet been achieved.” Further, for mediation to extend beyond six months from the return date (irrespective of the number of times the court is able to schedule the parties to meet during that time), “the court shall make particularized findings on the record for granting such an extension.”

Further, the bill proposes a vast increase in the authority of the court’s mediation specialists. Under the proposed legislation, the mediation specialists are empowered to recommend sanctions to the court. The bill also proposes giving the mediation specialists sole discretion as to whether a “reasonably complete package of financial documentation” has been submitted to the mortgagee. Should this determination be made, the bill goes on to mandate that the “mortgagee shall use such information to evaluate the mortgagor and treat such information as current under all applicable rules.”

The bill redefines “mortgagee” for purposes of the FMP in a way inconsistent with other Connecticut statutes by requiring the participation of the “owner of the debt.” The bill proposes only permitting the participation of an agent if that agent has “full settlement authority,” which is defined at length in the bill. That definition includes the ability to act immediately, without requiring the approval of any other person, and does not include settlement authority provided on a pre-established basis.

Additionally, the bill permits the presence of a mortgagor’s spouse in the mediation session, provided that the spouse resides at the subject property, regardless of whether he or she is on the note or mortgage, or is even a party to the action.

Under current Connecticut law, there is a period of up to eight months from the return date during which parties participating in the FMP may make no “motion, request or demand” except those that deal with the FMP. This eight-month bar, however, is considered waived by the mortgagor if he does bring a non-FMP “motion, request or demand.” The bill proposes to specifically exempt the filing of an answer, special defense, or counterclaim from the waiver language, thus permitting a mortgagor to file a counterclaim on a matter in the FMP while preventing the mortgagee from responding to it.

The current Uniform Foreclosure Mediation Standing Orders require that “while in mediation each party and each party’s attorney must make a good faith effort to mediate all issues,” but leave “good faith” undefined. The bill proposes a lengthy definition and also includes a provision that “[d]emonstrating that a party or attorney failed to mediate in good faith does not require a showing that such party or attorney acted with malice, intent to injure or an otherwise affirmative showing of bad faith.” The bill also goes into detail regarding sanctions, codifying as statutorily acceptable: the commonly sought imposition of fines payable to the court or aggrieved party; dismissal of the foreclosure action; a bar of interest accrual; an award of attorneys’ fees; compensation for lost income and expenses; and, forbidding the mortgagee from charging the mortgagor for the mortgagee’s attorneys’ fees.

On February 19, 2013, a public hearing on the bill was held.

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