05 Jul Connecticut Legislative Update
The Connecticut legislature recently amended its laws governing the recovery of money owed to a unit owners’ association due to the non-payment of assessments, effective June 24, 2013. The legislature also amended the laws governing homeowner protection rights, effective July 15, 2013.
CONNECTICUT HOUSE BILL 6662
In all actions brought to foreclose a lien or a security interest, the association’s lien is prior to all security interests to the extent of an amount equal to the common expense assessments based on the periodic budget adopted by the association which would have become due in the absence of acceleration during the 9 (previously 6) months immediately before institution of an action to enforce either the association’s lien or a security interest, excluding any late fees, interest, or fines which may be assessed by the association during the 9-month period.
An association may not commence an action to foreclose a lien on a unit unless the association has made a demand for payment in a record and has simultaneously provided a copy of such record to the holder of the security interest.
Not less than 60 days prior to commencing an action to foreclose a lien on a unit, the association must provide a written notice by first class mail to the holders of all security interests, which must set forth the following:
- The amount of unpaid common expense assessments owed to the association as of the date of the notice;
- The amount of any attorney’s fees and costs incurred by the association in the enforcement of its lien as of the date of the notice;
- A statement of the association’s intention to foreclose its lien if the amounts set forth above are not paid to the association not later than 60 days after the date on which the notice is provided;
- The association’s contact information, including, but not limited to, the name of the individual acting on behalf of the association with respect to the matter, and the association’s mailing address, telephone number, and email address, if any; and
- Instructions concerning the acceptable means of making payment on the amounts owing to the association as set forth above.
Any notice required to be given by the association will be effective when sent. When providing the written notice required above, the association may rely on the last-recorded security interest of record in identifying the name and mailing address of the holder of that interest, unless the holder of the security interest is the plaintiff in an action pending in the Superior Court to enforce that security interest, in which case the association must provide the written notice to the attorney appearing on behalf of the holder of the security interest in such action.
The failure of the association to provide the written notice required above prior to commencing an action to foreclose its lien will not affect the priority of its lien for an amount equal to 9 months common expense assessments, but the priority amount in such action will not include any costs or attorney’s fees.
CONNECTICUT HOUSE BILL 6355
The term “borrower” does not include an heir or occupying nonowner of a property encumbered by a reverse mortgage.
“Lender” means the owner or servicer of the debt secured by a mortgage on residential real property or real property owned by a religious organization securing a loan made primarily for personal, family, religious, or household purposes that is the subject of a foreclosure action.
“Objectives of the mediation program” means a determination as to whether or not the parties can reach an agreement that will:
· Avoid foreclosure by means that may include consideration of any loss mitigation options available through the lender; or
· Expedite or facilitate the foreclosure in a manner acceptable to the parties.
“Objectives of the mediation program” includes an expectation that all parties endeavor to reach a determination with reasonable speed and efficiency by participating in the mediation process in good faith, but without unreasonable and unnecessary delays.
“Ability to mediate” means an exhibition on the part of the relevant person of a willingness, including a reasonable ability, to participate in the mediation process in a manner consistent with the objectives of the mediation program and in conformity with any obligations imposed below, including, but not limited to, a willingness and reasonable ability to respond to questions and specify or estimate when particular decisions will be made or particular information will be provided and, with respect to the lender, a reasonable familiarity with the loan file, any loss mitigation options that are available to the borrower, and the material issues raised in prior mediation sessions. Reasonable familiarity with the material issues may be achieved by becoming reasonably familiar with the mediator reports to the extent the reports are available.
Prior to July 1, 2014 (previously July 1, 2012), when a lender commences an action for the foreclosure of a mortgage on residential real property with a return date during the period from July 1, 2008, to June 30, 2009, inclusive, the lender must give notice to the borrower of the foreclosure mediation program.
A foreclosure mediation request form must not be submitted to the court on or after July 1, 2014 (previously July 1, 2012).
If at any time on or after July 1, 2008, but prior to July 1, 2014 (previously July 1, 2012), the court determines that the notice requirement above has not been met, the court may, upon its own motion or upon the written motion of the borrower, issue an order that a judgment must not be entered for 15 days, during which period the borrower may submit a foreclosure mediation request form to the court.
Prior to July 1, 2014 (previously July 1, 2012), a judgment of strict foreclosure or any judgment ordering a foreclosure sale must not be entered and instituted by the lender to foreclose a mortgage on residential real property unless:
- Notice to the borrower has been given by the lender and the time for submitting a foreclosure mediation request form has expired and a foreclosure mediation request form has not been submitted, or if the notice has not been given, the time for submitting a foreclosure mediation request form has expired and a foreclosure mediation request form has not been submitted; or
- The mediation period has expired or has otherwise ended, whichever is earlier.
Prior to July 1, 2014, when a lender commences an action for the foreclosure of a mortgage on residential real property with a return date on or after July 1, 2009, or, with respect to real property owned by a religious organization, a return date on or after October 1, 2011, the lender must give notice to the borrower of the foreclosure mediation program by attaching to the front of the writ, summons, and complaint that is served on the borrower:
- A copy of the notice of foreclosure mediation, in the form as the Chief Court Administrator (the “Administrator”) prescribes;
- A copy of the foreclosure mediation certificate form in the form as the Administrator prescribes;
- A blank appearance form, in the form as the Administrator prescribes; and
- With respect to an action for the foreclosure of a mortgage on residential real property with a return date on or after October 1, 2011, to September 30, 2013, inclusive, a mediation information form and a notice containing contact information for authority-approved consumer credit counseling agencies, which form and notice must be in the form as the Administrator prescribes.
For an action to foreclose a mortgage on residential real property with a return date on or after October 1, 2013, the mediation information form must instruct the borrower as to the objectives of the mediation program, explain the preliminary process of meeting with the mediator, instruct the borrower to begin gathering financial documentation commonly used in foreclosure mediation for use in meeting with the mediator and in mediation, and include a notice containing contact information for authority-approved consumer counseling agencies, which must be in the form the Administrator prescribes. The content of the mediation information form will be designed by the Administrator in consultation with representatives from the banking industry and consumer advocates.
With respect to actions with a return date on or after October 1, 2011, to September 30, 2013, inclusive, the notice must remind the borrower to deliver the completed mediation information form and the accompanying documentation described above and encourage the delivery in advance of the required date. With respect to actions with a return date on or after October 1, 2013, to June 30, 2014, inclusive, the notice must instruct the borrower to begin gathering financial information commonly used in foreclosure mediation for use in meeting with the mediator and in mediation.
Upon receipt of the borrower’s appearance and foreclosure mediation certificate forms, and provided the court confirms the defendant in the foreclosure action is a borrower and that the borrower has sent a copy of the mediation certificate form to the lender, the court will assign the case to mediation and issue notice of the assignment to all appearing parties, which notice must include an email address for all communications related to the mediation.
Promptly upon receipt of the notice of assignment, but not later than the 35th day following the return date, the lender or its counsel must deliver to the mediator, via the email address provided for communications related to the mediation, and to the borrower, via first class, priority, or overnight mail:
- An account history identifying all credits and debits assessed to the loan account and any related escrow account in the immediately preceding 12-month period and an itemized statement of the amount required to reinstate the mortgage loan with accompanying information, written in plain language, to explain any codes used in the history and statement which are not otherwise self-explanatory;
- The name, business mailing address, email address, fax number, and direct telephone number of an individual able to respond with reasonable adequacy and promptness to questions relative to the information submitted to the mediator, and any subsequent updates to the contact information, which must be provided reasonably promptly to the mediator via the email address provided for communication related to the mediation;
- All reasonably necessary forms and a list of all documentation reasonably necessary for the lender to evaluate the borrower for common alternatives to foreclosure that are available through the lender, if any;
- A copy of the note and mortgage;
- Summary information regarding the status of any pending foreclosure avoidance efforts being undertaken by the lender;
- A copy of any loss mitigation affidavit filed with the court; and
- At the lender’s option:
- The history of foreclosure avoidance efforts with respect to the borrower;
- Information regarding the condition of mortgaged property; and
- Other information that the lender may determine is relevant to meeting the objectives of the mediation program.
Following the mediator’s receipt of the information, the court will assign a mediator to the mediation and schedule a meeting with the mediator and the borrower and must endeavor to schedule the meeting on or prior to the 49th day following the return date. The notice of the meeting must instruct the borrower to complete the forms prior to the meeting and to provide the forms together with the documentation contained in the list, as provided by the lender following the filing of the foreclosure mediation certificate, at the meeting. At the meeting, the mediator must review the forms and documentation with the borrower, along with the information supplied by the lender, in order to discuss the options that may be available to the borrower, including any community based resources, and assist the borrower in completing the forms and providing the documentation necessary for the lender to evaluate the borrower for alternatives to foreclosure. The mediator may elect to schedule subsequent meetings with the borrower and determine whether any borrower may be excused from an in-person appearance at the subsequent meeting.
As soon as practicable, but no later than the 84th day following the return date, the mediator must facilitate and confirm the submission by the borrower of the forms and documentation to the lender’s counsel via electronic means and, at the lender’s election, directly to the lender per the lender’s instruction, and determine, based on the borrower’s attendance at the meetings and the extent the borrower completed the forms and provided the documentation, or failed to perform the tasks through no material fault of the lender, and file a report with the court indicating:
· Whether mediation will be scheduled with the lender;
· Whether the borrower attended scheduled meetings with the mediator;
· Whether the borrower fully or substantially completed the forms and provided the documentation requested by the lender;
· The date on which the lender supplied the forms and documentation; and
· Any other information the mediator determines to be relevant to the objectives of the mediation program.
A meeting or communication between the mediator and borrower will not be treated as an impermissible communication in which a necessary party is not present. If the mediator determines that the lender must participate in mediation, the court will promptly issue notice to all parties of the determination and schedule a mediation session between the lender and borrower to be held not later than 5 weeks following the submission to the lender of the forms and documentation.
If the mediator determines that no sessions between the lender and borrower will be scheduled, the court will promptly issue notice to all parties regarding the determination and mediation will end. Any borrower wishing to contest a determination must petition the court and show good cause for re-inclusion in the mediation program, including, but not limited to, a material change in financial circumstances or a mistake or misunderstanding of the facts by the mediator.
The court may refer a foreclosure action brought by a lender to the foreclosure mediation program at any time, for good cause shown, provided the borrower has filed an appearance in said action and further provided the court will, not later than the date 3 business days after the date on which it makes the referral, send a notice to each appearing party assigning the case to mediation and requiring the parties to participate in the premediation process, with the court establishing deadlines to ensure that the premediation process is to be completed by the parties as expeditiously as the circumstances warrant and permit. When determining whether good cause exists, the court will consider whether the parties are likely to benefit from mediation and, in the case of a referral after prior attempts at mediation have been terminated, whether there has been a material change in circumstances.
With respect to foreclosure actions with a return date on or after July 1, 2011, to June 30, 2014, inclusive, the lender is permitted following the 8-month or 15-day period described above to simultaneously file, as applicable, a motion for default and a motion for judgment of strict foreclosure or a motion for judgment of foreclosure by sale with respect to the borrower in the foreclosure action.
A foreclosure mediation must now address the disposition of the property through means other than the foreclosure process, including short sales and deeds in lieu of foreclosure. Mediators must not give legal advice to any party in mediation.
For any action for the foreclosure of a mortgage on residential real property with a return date during the period from July 1, 2008, to June 30, 2009, inclusive, the mediation period under the foreclosure mediation program must conclude not later than the conclusion of the third mediation session between the borrower and lender or 7 months after the return date, whichever is earlier, except that the court may, in its discretion, for good cause shown, upon the motion of any party or the mediator, extend or shorten the mediation period.
The borrower and lender must appear in person at each mediation session and will have the ability to mediate, except that:
- If a party is represented by counsel, the party’s counsel may appear in lieu of the party to represent the party’s interests at the mediation, provided the party has the ability to mediate, the borrower attends the first mediation session in person, and the party is available during the mediation session by telephone and to participate in the mediation session by speakerphone, provided an opportunity is afforded for confidential discussions between the party and party’s counsel;
- Following the initial mediation session, if there are 2 or more borrowers who are self-represented, only one borrower is required to appear in person at each subsequent mediation session unless good cause is shown, provided the other borrowers are available during the mediation session and to participate in the mediation session by speakerphone; and
- If a party suffers from a disability or other significant hardship that imposes an undue burden on the party to appear in person, the mediator may grant permission to the party to participate in the mediation session by telephone.
A borrower’s spouse, who is not a borrower but who lives in the subject property, may appear at each mediation session, provided all appearing borrowers consent, in writing, to the spouse’s appearance or the spouse shows good cause for his or her appearance and the borrowers consent in writing to the disclosure of nonpublic personal information to the spouse. If the borrower has submitted a complete package of financial documentation in connection with a request for a particular foreclosure alternative, the lender has 35 days from the receipt of the completed package to respond with a decision and, if the decision is a denial of the request, provide the reasons for the denial. If the borrower has, in connection with a request for a foreclosure alternative, submitted a financial package that is not complete, or if the lender’s evaluation of a complete package reveals that additional information is necessary to underwrite the request, the lender must request the missing or additional information within a reasonable period of time of the evaluation. If the lender’s evaluation of a complete package reveals that additional information is necessary to underwrite the request, the 35-day deadline for a response must be extended but only for so long as is reasonable given the timing of the borrower’s submission of the additional information and the nature and context of the required underwriting.
Not later than the third business day after each mediation session held on or after July 15, 2013, the mediator must file with the court a report indicating, to the extent applicable:
- The extent to which each of the parties complied with the requirements above, including the requirement to engage in conduct that is consistent with the objectives of the mediation program and to possess the ability to mediate;
- Whether the borrower submitted a complete package of financial documentation to the lender;
- A general description of the foreclosure alternative being requested by the borrower;
- Whether the borrower has previously been evaluated for similar requests, whether prior to mediation or in mediation, and, if so, whether there has been any apparent change in circumstances since a decision was made with respect to that prior evaluation;
- Whether the lender has responded to the borrower’s request for a foreclosure alternative and, if so, a description of the response and whether the mediator is aware of any material reason not to agree with the response;
- Whether the borrower has responded to an offer made by the lender on a reasonably timely basis, and if so, an explanation of the response;
- Whether the lender has requested additional information from the borrower and, if so, the stated reasons for the request and the date by which the additional information must be submitted so that information previously submitted by the borrower, to the extent possible, may still be used by the lender in conducting its review;
- Whether the borrower has supplied, on a reasonably timely basis, any additional information that was reasonably requested by the lender, and, if not, the stated reason for not doing so;
- If information provided by the borrower is no longer current for purposes of evaluating a foreclosure alternative, a description of the out-of-date information and an explanation as to how and why the information is no longer current;
- Whether the lender has provided a reasonable explanation of the basis for a decision to deny a request for a loss mitigation option or foreclosure alternative and whether the mediator is aware of any material reason not to agree with that decision;
- Whether the lender has complied with the timeframes for responding to requests for decisions;
- If a subsequent mediation session is expected to occur, a general description of the expectations for the subsequent session and for the parties prior to the subsequent session and, if not otherwise addressed in the report, whether the parties satisfied the expectations set forth in previous reports; and
- A determination of whether the parties will benefit from further mediation.
The mediator must deliver a copy of the report to each party to the mediation when the mediator files the report. The parties will have the opportunity to submit their own supplemental information following the filing of the report, provided the supplemental information is submitted not later than 5 business days following the receipt of the mediator’s report. Any request by the lender to the borrower for additional or updated financial documentation must be made in writing.
The court may impose sanctions on any party or on counsel to a party if the party or the counsel engages in intentional or a pattern or practice of conduct during the mediation process that is against the objectives of the mediation program. Any sanction that is imposed must be proportional to the conduct and consistent with the objectives of the mediation program. Available sanctions include, but are not limited to, terminating mediation, ordering the borrower or lender to mediate in person, forbidding the lender from charging the borrower for the lender’s attorney’s fees, awarding attorney’s fees, and imposing fines. In the case of egregious misconduct, the sanctions are heightened. The court will not award attorney’s fees to any lender for time spent in any mediation session if the court finds that the lender has failed to comply, unless the court finds reasonable cause for the failure.
If the mediator reports to the court after the first or second mediation session that the parties may benefit from further mediation, the mediation period will continue. The mediation period must conclude following the third mediation session or if more than 7 months have elapsed since the return date. Not later than 15 days following the conclusion of the mediation period, and any extended mediation sessions, any party may move for, or the mediator may request, an extension of the mediation period. The court will grant only one additional mediation session per motion or request upon a finding that it is highly probable the parties will reach an agreement through mediation. The court may also grant one additional mediation session per motion or request upon a finding that any party has engaged, either intentionally or by a pattern or practice, in conduct that is against the objectives of the mediation program.
The court will make its ruling not later than 20 days after the filing of the motion or request, and a judgment of strict foreclosure or any judgment ordering a foreclosure sale will not be entered until the court denies the motion or request or the conclusion of the extended mediation session. Upon the grant of an additional mediation session following the proper finding, the court will establish an expeditious deadline for the extended mediation session to occur. The extended mediation period will conclude following the extended mediation session.
The mediation period may be extended for one additional mediation session without a hearing provided all parties to the mediation agree that the parties would benefit from the a session and, in consultation with the mediator, establish an expeditious deadline for the session to take place.
To determine whether to extend mediation, the court may consider all matters that have arisen in the mediation, including, but not limited to, the number of motions to extend mediation, the reasons for which an agreement has not been reached, the objectives of the mediation program, the extent to which the parties will benefit from further mediation, the reports submitted by the mediator, papers submitted in connection with any motion, and any supplemental reports submitted by a party. The court will state its reasons in the order granting or denying any the motion or request to extend mediation.
For any case pending as of October 1, 2013, in which mediation is ongoing, if 3 or fewer sessions have been held, the case will be treated as if no sessions have been held as of the date. If 4 or more sessions have been held, then any party or the mediator may move to terminate or extend the mediation period and, if no motion to extend is made, the mediation period will conclude after the third mediation session occurring after October 1, 2013.
For any action for the foreclosure of a mortgage on residential real property with a return date during the period from July 1, 2009, to June 30, 2014, inclusive, or for any action for the foreclosure of a mortgage on real property owned by a religious organization with a return date during the period from October 1, 2011, to June 30, 2014, inclusive, the mediation period under the foreclosure mediation program must commence when the court sends notice to each appearing party scheduling the first foreclosure mediation session. The mediation period must conclude not later than the conclusion of the third mediation session between the borrower and lender or 7 months after the return date, whichever is earlier, except that the court may, in its discretion, for good cause shown, upon the motion of any party or request by the mediator, extend or shorten the mediation period.
In a foreclosure action, the lender may file a motion for judgment of foreclosure simultaneously with a motion for default for failure to appear, if the lender proves, by clear and convincing evidence and the use of a proper affidavit, that the real property that is the subject of the foreclosure action is not occupied by a borrower, tenant or other occupant and not less than 3 of the following conditions exist:
- Statements of neighbors, delivery persons or government employees indicating that the property is vacant and abandoned;
- Windows or entrances to the property that are boarded up or closed off or multiple window panes that are damaged, broken or unrepaired;
- Doors to the property are smashed through, broken off, unhinged or continuously unlocked;
- Risk to the health, safety or welfare of the public or any adjoining or adjacent property owners that exists due to acts of vandalism, loitering, criminal conduct or the physical destruction of the property;
- An order by municipal authorities declaring the property to be unfit for occupancy and to remain vacant and unoccupied;
- The lender secured or winterized the property due to the property being deemed vacant and unprotected or in danger of freezing; or
- A written statement issued by any borrower or tenant expressing the clear intent of all occupants to abandon the property.
A foreclosure action must not proceed under the expedited procedures above if there is on the property:
- An unoccupied building undergoing construction, renovation or rehabilitation that is:
- Proceeding diligently toward completion; and
- In compliance with all applicable ordinances, codes, regulations, and statutes;
- A secure building occupied on a seasonal basis; or
- A secure building that is the subject of a probate action to quiet title or other ownership dispute.