Success For Mortgage Mediation in Connecticut?

by Eugene Melchionne, Esq.

January 31, 2009

Effective July 1, 2008, Connecticut established a mediation program for foreclosures.  Statistics available for the latest period ending November 30 2008 reveal some interesting detail.  Mediators are working diligently to rescue residential homes from the auctioneer.  However, the program is missing important components.

In the period of July 1st to November 30th, there were 9,917 foreclosures filed in the state, an average of 450 cases per week.  In that period, mediators successfully negotiated 519 cases so that homeowners got to remain in their homes.  This is just slightly over 5% of all cases filed.  Only 380 cases or 3.83% resulted in a modification of the mortgage terms.  Despite the hard work of Connecticut’s mediators, the state’s residents are not being protected from foreclosure.

Is the program failing?  The first problem is notice.  There are differences in opinion where the notice of availability of mediation should be included in the foreclosure papers when they are served.  As a result, fully 54% of individuals served with a foreclosure notice never ask for help.  Consistent and better notice of the existence of mediation and what it can accomplish is required.  Another 21% are deemed not to be eligble for the program because they are multifamily homes or other types of property.  When multifamily houses go into  foreclosure, families lose their home.  Mediation needs to be expanded to all types of residential property whether or not the owner resides there.

The real problem is that the mediators for all their hard work, cannot force any resolution on the lender.  Indeed, the state may not have the power to force this type of resolution.  All the more reason why an amendment to the law allowing bankruptcy judges the power to modify home mortgage is needed.  Only when lenders come around to realize that saving homes is good business, will laws like this become unnecessary.

“ConnecticutGene Melchionne is a bankruptcy lawyer covering the entire State of Connecticut. He can often be found on Google+ and Twitter, where he shares information about consumer protection issues and personal finance.

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Last modified: May 28, 2013