May 21, 2012

GOV. MALLOY, ATTORNEY GENERAL JEPSEN ANNOUNCE ALLOCATION OF MORTGAGE FORECLOSURE SETTLEMENT FUNDS

Money Will Support Connecticut Fair Housing Center, Mortgage Foreclosure Hotline and Provide Other Assistance to Distressed Homeowners

(HARTFORD, CT) - Governor Dannel P. Malloy and Attorney General George Jepsen today announced that Connecticut's share of the $25 billion mortgage foreclosure servicing settlement will be spent to bolster and expand programs assisting Connecticut's distressed homeowners.

The national settlement announced in February with the nation's five largest mortgage loan servicers will provide an estimated $119 million in loan modification and refinancing relief to Connecticut homeowners, an estimated $7.3 million to Connecticut foreclosure victims, and $28.1 million in payments to the state to offset the effects of the foreclosure crises. In addition, tough new servicing standards will protect consumers from abusive loan servicing and foreclosure practices in the future.

The state's $28.1 million share of the settlement will be used to support state and nonprofit initiatives that provide direct assistance to homeowners facing foreclosure. The funding will give Connecticut the tools it needs to weather the remainder of the foreclosure crisis, avoid preventable foreclosures and ensure that the state's borrowers receive the full benefits of the settlement.

"At a time when other states are using money from this settlement to plug holes in their budgets, Connecticut is taking a different path," said Governor Malloy. "We know that many homeowners are still struggling, and until we find a way to bring stability to the housing market, there will continue to be a drag on our recovery. This funding will help assist a critical component of our overall economic goal, to promote economic growth that is sustainable and benefits a majority of our residents."

Attorney General Jepsen said, "As I travel the state, I see many Connecticut families who are still suffering from the problems created by illegal bank mortgage servicing practices. The funding announced today will go toward programs that will help those struggling families avoid foreclosure and stay in their homes.

Jepsen was a member of the executive team of Attorneys General who helped to negotiate the largest joint federal-state settlement in history.

Most of the money, approximately $21 million, will be used to directly fund the Emergency Mortgage Assistance Program administered by the Connecticut Housing Finance Authority and pay for debt service associated with state bonds previously issued for the program.

Other funds will be used to add a position for two years to the Department of Banking's Foreclosure Prevention Hotline, which handled approximately 5,000 calls last year. Hotline staff provide information and make referrals based on the needs of individual borrowers. Also, two additional foreclosure staff attorneys will be funded for three years at the Connecticut Fair Housing Center, where three staff attorneys currently provide legal support for homeowners facing foreclosure actions and train pro bono foreclosure defense attorneys. An attorney in the Office of the Attorney General also will be funded for three years to assist with foreclosure-related programs, cases and other consumer protection work. Additional funds will be used for public service announcements promoting the hotline and for mortgage foreclosure servicing events and other related initiatives.

Additional money will be used for state Department of Economic and Community Development (DECD) grants to add 10 housing counselors, approved by the U.S. Department of Housing and Urban Development and the Connecticut Housing Finance Authority, for three years. They will join approximately 27 counselors at 11 nonprofit organizations in Connecticut currently providing foreclosure prevention counseling to distressed borrowers. These organizations handle a large number of referrals from the Attorney General, the Department of Banking and the Connecticut Fair Housing Center. Similarly, a DECD grant will provide funding for a legal aid tenant protection attorney to assist low-income tenants living in foreclosed properties who have disputes with owners taking title after foreclosure.

Another $400,000 will be used by the state Judicial Department to purchase equipment for its highly successful Foreclosure Mediation Program and to hire an administrator for three years to expand its Voluntary Attorney Foreclosure Advice pilot program to all judicial districts. The state Department of Labor will receive $500,000 over three years to support the innovative Mortgage Crisis Job Training Program.

As authorized by the settlement agreement, 10 percent of the funds will be payable to the state as civil penalties against the banks.

As a member of the Monitoring Committee overseeing the servicer's implementation of the settlement, Jepsen will work to ensure that the servicers meet their obligations.

He and Governor Malloy urged anyone who has fallen behind on their mortgage loan, or who is anticipating difficulty keeping their payments current, to contact the state Department of Banking Foreclosure Assistance Hotline at 1-877-472-8313 for foreclosure-related and general loan-modification questions.

Connecticut homeowners may also learn more about other components of the settlement at the following websites: www.NationalForeclosureSettlement.com ; www.mortgageoversight.com ; www.ct.gov/ag ; and www.HUD.gov .

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For Immediate Release: May 21, 2012

Contact: Andrew Doba

Office of Governor Dannel P. Malloy

Andrew.Doba@ct.gov

860-524-7308 (office)
860-770-8090 (cell)

Twitter: @GovMalloyOffice

Facebook: Office of Governor Dannel P. Malloy