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Mediation Program Keeping Connecticut Debtors in their Homes Longer

Connecticut’s residential foreclosure problems are getting some relief from a new mandatory foreclosure mediation program, according to a Monday release by the governor’s office.

A new July 2009 mandatory mediation program has had a 75% success rate, according to Connecticut Judicial Branch officials whose numbers were reported this week by Connecticut Gov. M. Jodi Rell’s office. The report was welcome news in the state as foreclosures and delinquencies soared in the third quarter.

The success rate means that many homeowners who thought they were going to lose their homes are getting to stay in them, at least temporarily.

The governor’s office reports that as of Oct. 31, the foreclosure mediation program–it had been voluntary until the July legislation making mediation mandatory for all foreclosures--had completed 4,448 cases.

The report says that 2,721 of the borrowers reached an agreement and avoided foreclosure. Another 611 cases reached an agreement for a short sale, a deed in lieu, or an extension of the law day or sale date.

Under Senate Bill 948, mediation is mandatory for all foreclosure proceedings that began after July 1, 2009, in Connecticut. A lender cannot foreclose on a home without first participating in a court-supervised mediation with the owner of the home to reach a “fair, voluntary, negotiated agreement regarding the property.”

Gov. Rell’s statement calls the program a “tremendous success story.” She continued, “Clearly, mediation is an effective tool homeowners can use to ward off foreclosure.”

This news comes at a time when there has been an unprecedented increase in Connecticut foreclosure rates. According to the Hartford Courant, the Mortgage Banker's Association reports that Connecticut has seen the largest quarterly increase in foreclosures in nearly 30 years, with one in every 14 mortgages in the state either in foreclosure or 90 days or more overdue.

The article provided national context, too: Connecticut’s 7% foreclosure and delinquency rate in the most recent quarter was still lower than the national rate of almost 9%, and about the same as other New England states. The article notes that nationally, “foreclosure woes remained concentrated in four states: Florida, Nevada, California and Arizona. Florida topped all states, with 19 percent of all loans in foreclosure or seriously delinquent.”

The Hartford Courant article on Connecticut's foreclosure rate can be found here.

A writeup of Gov. Rell’s press release can be found here.

For more information about other state ADR foreclosure programs, go here:

–Erika Myrill, CPR Intern