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Help offered to troubled homeowners in Connecticut

July 7, 2012 1:39:38 PM PDT
Connecticut is giving struggling homeowners another opportunity to meet with bankers to find a way to change their loan agreements and pay their monthly mortgages.

Gov. Dannel P. Malloy, Attorney General George Jepsen and the state Banking Department are sponsoring the third forum on Tuesday to link homeowners with bankers to review loan modification plans and help avoid foreclosure.

"The governor and the attorney general wanted the department to organize these events to provide a forum with consumers that are troubled to meet eyeball to eyeball and pound out some kind of solution," Banking Commissioner Howard F. Pitkin said.

Homeowners and bankers may use the meetings to discuss ways to modify mortgages by extending the term of the loan, reducing the interest rate, negotiating a short sale in which the lender accepts less than the amount due or, in rare cases, cutting the principal balance owed.

"Face-to-face interactions cannot be understated," said T.J. Crawford, a spokesman for Bank of America.

Pitkin said homeowners who are fearful of banks and the prospect of foreclosure have been more comfortable attending forums organized by the state. The two previous state forums have drawn nearly 3,000 homeowners, he said.

Crawford said the bank reached out to 6,100 homeowners for a three-day forum in Connecticut in January, but only about 200 attended. Many customers avoid dealing with the problem, refusing to open mail or answer the phone, he said.

"It's a challenge for us, with multiple phone calls, multiple mailings," Crawford said.

Thomas S. Mongellow, vice president and treasurer of the Connecticut Bankers Association, credited the state's success in drawing struggling homeowners to effective advertising by Malloy, Jepsen and the Banking Department.

"That's why you get such a great turnout, why you get good results," he said.

Foreclosures in Connecticut are down sharply from 2010 but jumped this year over 2011, according to data obtained from The Warren Group, publisher of The Commercial Record. From January to May, the state posted 944 foreclosures, up more than 50 percent from last year, but down from 1,450 in 2010.

Cory S. Hopkins, editorial director for The Warren Group, said foreclosures slowed in the first half of last year because many lenders re-examined their foreclosure practices following scandals and lawsuits over lending that many homeowners and advocates said were lax or even fraudulent. Hopkins said lenders are more comfortable that "all their I's are dotted and T's crossed" and are picking up the pace of foreclosures this year.

Rep. Joe Courtney, D-Conn., said Connecticut is faring better than other states where the housing crash was far worse

"Connecticut is not one of the real basket case states like California, Florida and Nevada," he said.

Mongellow said foreclosures in Connecticut are slower than in many other states because efforts to remove homeowners must go through lengthy court procedures. Some foreclosures are longer than 18 months or two years, he said.

The state forums are part of many efforts, he said, "to reach out to borrowers, to remediate a situation before it gets out of hand."

The forums are partly the result of a national settlement between the five largest U.S. mortgage lenders and U.S. states. The lenders agreed to overhaul their industry after deceptive foreclosure practices drove homeowners out of their homes. The $25 billion settlement that Jepsen helped negotiate includes about $120 million for thousands of Connecticut homeowners and $27 million to the state for mortgage relief or counseling.

The state said participants will include representatives of several banks, housing counselors, lawyers for the Connecticut Fair Housing Center, court-sponsored foreclosure mediators and Legal Services representatives.

The forum will be held at the University of Connecticut at Storrs.

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